Leaderboard

You can make 1/1/19 an entry date for employees who completed 1,000 hours during the prior 12 month period, regardless of the fact that the company was not in existence for the entire 12 month period. You could also let all employees who were employed on 1/1/19 enter on 1/1/19 who are reasonably expected to complete 1,000 hours of service during a 12 month period.

Also a reasonable possibility, but the deferral ability as of 10/1 is critical otherwise you don't have a SH plan for that year.

Halitosis from having worms in your mouth?

Or you could allow the deferrals on 10/1, and just hold them until the recordkeeper is ready, and add lost earnings. Not ideal but nothing in this situation is ideal.

Let me add my support to M, who is describing the common situation in which a parent pays a minor child to be an employee of the parent’s business. The unusual fact is that the business has a 401(k)-plan permitting deferral and contribution to the plan of part of the child’s compensation. The question is who can make such deferral decision, including what portion of compensation to defer. No State law permits minor children to decide how to dispose of their property. All states have a procedure by which the state courts or a guardian appointed by the court may exercise such power. ERISA has no provision that gives minors or any other individual lacking the capacity the ability to decide how to dispose of such individual’s property. Thus, the plan could not rely on any election executed by the minor or any other individual without capacity Thus, an ERISA plan must defer to the decision of the child’s guardian or a local court about the extent of the child’s deferral, the investment of the deferrals, or the form of the distributions of the child’s account balance on the termination of employment. Parents need not be their minor child’s guardian, but in practice if there is no marital dispute or parental abuse issue, a child’s parent is often accepted as the child’s guardian without any court appointment. If an ERISA plan withholds compensation in a manner that is not consistent with the election of the child’s guardian, the consequence would be the same as if it withheld compensation of any employee with capacity without the employee’s consent. In either case, the employee would be entitled to a refund of the wrongful contribution and accrued earnings. If the 401(k) plan had a qualified automatic contribution arrangement the issue would remain because such arrangements must give the employee the right to stop such contributions. This right would be a nullity unless the person with the right to act on behalf of the employee without capacity is timely given such a right. Whether or not the guardian of the individual without capacity seeks a refund in such a case has nothing to do with the tax qualification of the 401(k) plan. If the plan fails to follows its terms that deferrals be made only in accord with employee elections, whether initial or to stop an automatic contribution, the plan is not tax-qualified. There would no such compliance if an employee lacks capacity to make such an election, and the person, if any, with such authority is not given the right to make such election. On the other hand, a timely refund could eliminate the tax-qualification issue.

Get a copy of the plan's SPD and see if you have met the requirements described in it. It will specify the money type(s) available and the conditions. If you determine you meet all of the conditions, write a letter to the decisionmaker demonstrating your satisfaction of the conditions point-by-point and the sufficiency of your account and demand that they follow the terms of the plan as described in the SPD.

I'll be there Austin. I got a later flight than usual on Wednesday so I'll actually get to stay for the entire last session

OK, we'll all be waiting with baited breath to see what the response is! I won't be able to make it myself.