Leaderboard

I agree you are looking in the wrong place. The reg you cited deals with the frequency of deferral elections. You need to look at 1.401(k)-3(e)(2). The initial plan year for a new safe harbor plan (assuming they are not a successor plan and not a newly established employer) must be at least 3 months long. In addressing the similar situation of adding a CODA to a PS plan, it specifically says the CODA must be in effect for at least 3 months. If you look at the definition of "plan" in 1.401(k)-6 and follow it through, I think that a 3 month plan year also means the CODA must be in effect for 3 months. What you are describing is a CODA in effect for one month. So, it would not be safe harbor. In that situation, we would get the plan up and going by 10/1/19, or it would not be safe harbor until 1/1/2020.

Agree with all the advice. Need to find a new RK or choose a pooled investment plan for the start and switch to participant directed at some point in the future.

Thanks Austin. It will be in the Ask the Experts session at ASPPA Annual this year.

I would give notice to all parties that a DRO has been received and will be reviewed to determine qualified status. 100% agree. This is fairly easily distinguishable from simply knowing that P is going through a divorce, and that QDRO may or may not be issued at its conclusion. AP is not the ONLY* party with rights that should be protected. *Edited for clarity. I somehow left out the only in my last sentence. Of course AP also has rights that need protecting.

And if the plan's administrator would use a temporary investment, the communications must explain that a participant lacks a power to direct investment until the later recordkeeping services begin. Not the happiest way to begin a plan.

I think you are looking at the wrong issue. The plan is adopted on 9/30. When it is adopted, the employees have the right to defer at that time. Your problem is one of getting the accounts established (one has to question why so long, but that is another issue). The employees can start deferring with the first payroll after 9/30. There is no reason why a deferral election form could not be produced immediately and money withheld that will be matched later. The only problem is a place to put the money. Why not open an account in the name of the plan in the bank (it can be a money market account) that will hold the funds until the more formal investments are chosen and made available? Then, those warehoused funds would be moved into the appropriate investment. I think you are playing with fire if the employees only really have 30 days to make deferrals, and that is not going to justify the safe harbor aspect of the plan, IMHO.

I think this will give you your answer that you are looking for (from the current edition of Derrin's book). Hours worked for the staffing company are required to be counted when someone becomes an actual hire. Q 5:44 How do the leased employee rules affect a “lease to own” situation? Many employers will lease an employee for several months, or possibly longer, before offering them a permanent position with the company as an employee. This can simplify bookkeeping and reduce an employer’s unemployment insurance costs. If a recipient hires its former worksite employee, the employee is credited with all hours of service earned while working under the leasing arrangement, whether or not he or she satisfied the substantially full-time requirement. [Code §414(n)(4); BL 11, BL 135, BL 136] Example 5.44.1 Sandy’s Sweatshop leases Ellen from a temporary agency for three months, during which Ellen works 500 hours for Sandy. Sandy then hires Ellen directly. Ellen is already credited with 500 hours of service, even though Ellen was not technically a leased employee because she did not satisfy the substantially full-time requirement. Because the employment commencement date [Q 19:8] is the first day a worker is entitled to be credited with an hour of service, [DOL Reg. §2530.202-2(a)] Ellen’s first eligibility computation period begins when she started working for Sandy under the leasing arrangement. Remember that the longer a “temporary” worker stays with a company, the more likely it is that a court may find the company is the true common law employer. [See Q 3:28] The importance of this issue can transcend the importance of the leased employee issues. Example 5.44.2 Fancy Tools, Inc. has a good health plan for its employees. The plan document says all employees working over 30 hours per week participate. Fancy Tools needs a new shipping clerk. They contact Astaire Temps, who sends over Waldo as a temporary clerk. Waldo works there several months. Waldo is just like other Fancy Tools employees, except that Astaire gives him his paycheck. After four months there, Waldo contracts cancer and demands to have his medical costs covered under the plan, because he is Fancy Tools’ common-law employee. While that claim might have been rejected out of hand had he worked there only one week, it becomes more credible the longer he is there.

You have hit upon what I consider to be one of the hardest topics in this field. I can't stress too much you need to do a lot of research on the leased employee rules. https://benefitslink.com/cgi-bin/qa.cgi?db=qa_who_is_employer&n=20