EEK

Thank you for your questions. The plan has been in effect for several years as a profit sharing (with new comp formula). It was restated effective October 1st to add a 401(k) feature. Deferrals began with the first pay period after October 1st. At the same time, a safe harbor provision was added, also effective October 1st. The plan provides that a 3% safe harbor contribution be made for eligible participants actively employed on and after October 1st. There are two terminees in question. Both terminated in the year the 401(k)/safe harbor provisions were added, but prior to October 1st. One worked <500 and one more. Coverage testing passes with the <500 terminee excluded.

I am interested in any comments regarding giving safe harbor (3%) contributions to former participants who terminated before an existing calendar year profit sharing plan was amended to add a safe harbor provision on October 1st of the plan year in which termination occurred. Such employees would not be "eligible" when the safe harbor provision became effective. Thank you.