EBDI

Thanks everyone for your answers. The plan does not shift to calendar year for eligibility. The client requested that the plan be designed to use anniversary of hire date. They are our only client that does that.

This plan has a 1 YOS, age 21, 1000 hours with monthly entry dates. It uses the anniversary date of hire for the first and all subsequent years for eligibility. An employee hires 8/28/16, terminates 9/14/16 and rehires 2/25/17. He does not work 1000 hours in his first year (8/28/16 to 8/27/17). The client wants to use the 2/25/17 date as his hire date. The plan document only discusses the original hire date. I haven't found anything that indicates we could use a rehire date to determine eligibility. If the 2/25/17 hire date is used, he enters on 3/1/18. If we continue with the original hire date, he enters on 9/1/18. Does anyone have any input on using a rehire date vs. the original date of hire to determine eligibility?

I recently found out that a brokerage firm that our client uses for a 401k plan also doesn't withhold for taxes nor will they forward them to the IRS. They will issue a check in the amount of the taxes due if we ask. The federal tax check is sent to the plan sponsor who is then responsible for sending it to the IRS. I was very surprised that they don't offer this service.

Thank you for the responses!

This is a safe harbor 401k plan in which a former employee terminated in 2009 and is re-hired in 2017. She would like to repay the distribution from the plan in order to have the profit share forfeitures repaid into her account. The plan document states the following for rehire after 5 One Year Breaks: After Five One-Year Breaks. If a Participant resumes employment as an Eligible Employee after forfeiting the nonvested portion of his Account balance after 5 consecutive One-Year Breaks in Service (One-Year Periods of Severance if the Plan uses the elapsed time method) and is not fully (100%) vested upon reemployment, the Participant's Account balance attributable to his pre-break service shall be kept separate from that portion of his Account balance attributable to his post-break service until such time as his post-break Account balance becomes fully (100%) vested. A Participant with a balance in his Elective Deferral Account shall be considered a vested Participant for purposes of Code section 411(a)(6)(D)(iii). Why would the non-vested forfeitures have to be kept separate? Does vesting in the returned forfeitures increase with each subsequent YOS? She was 60% vested in 2009.

Tom's suggestion was correct. The system did not restore their previous YOS. Thanks everyone for the help.

Thanks for the advice. I am using ftwilliams. I sent them a help request and they sent me advice on how to override the system. They didn't explain why the system was placing them in the other excludable group in the first place.

The ADP test is run using the excludable disaggregation method. The software I use categorized two re-hired employees as otherwise excludable. Both were 100% vested participants prior to their first termination and entered the plan on their re-hire dates (4/20/16 and 7/13/16). Is the software classifying them correctly? This plan does not use the rule of parity.

If they use compensation from the date eligible in testing, that will include the 7/5 payroll. For that reason, I always encourage my clients to use the first payroll after the entry date to start contributions.

Tom, that is a great explanation. Thanks to everyone for taking the time to help.

David, thanks for the advice!

The plan document does state coincident with or next following. My concern is that from 2009 to 2014, the employee did not work 1000 hours and was under age. In the plan years ending 3/31/15 and 3/31/16, he worked over 1000 hours. Age was met 7/1/15. Does he have to wait until the end of the 12 month period (the eligibility computation period) to enter the plan or does he enter as soon as he is 20-1/2? If he has to wait for the end of the eligibility computation period, the entry date would be the start of the next year which is 4/1/16. If he enters as soon as he turned 20-1/2, then he enters on 7/1/15. If I am reading the plan document correctly, he enters on 7/1/15. Would that be correct?

Plan year end is 3/31. Eligibility is age 20-1/2 and 1 YOS with quarterly entry dates. Eligibility changes to the plan year after the first year. Employee hires in 2009 with a DOB of 1/1/1995. He turned 20-1/2 on 7/1/2015. He has 2 YOS. Does he enter on the date he turns age 21 (7/1/2015) or at the start of the next plan year 4/1/2016?

Mike, Lou is correct about the age weighted and 3% safe harbor floor. Tom, thanks for the suggestion. I will try that to see if it passes.

Can the 11g amendment be used to give a pro-rata contribution to the two NHCE's? I would like to avoid bringing into the plan any of the 3 employees who are not eligible due to the 1000 hour requirement. There are no terminated participants to bring into the plan.