Topps_52311

I am now looking at the 401(k) Profit Sharing Adoption Agreement proposed. Where the reinstatement effective date is today, the initial effective date of the plan dates back to 1995. I have advised them that they cannot exclude years of service prior to the adoption agreement effective date (today) - they can only exclude years of service prior to the initial effective date of the plan (1995). Therefore, by 'turning on' the Profit Sharing piece, all employees years of service will be counted for vesting purposes based on date of hire. The only way they can exclude years of service prior to the adoption agreement effective date (today) is to create a new plan.

Thank you all for the input. Very helpful. Based on the input, I am understanding that, if the PS is part of the existing 401(k), then they cannot exclude YOS. However, they can add a new PS plan and exclude YOS then. If they terminate the existing 401(k) plan within 5 years, then the current 401(k) vesting rules would apply...

Thank you Bill. If they want to add the Profit Sharing as a separate plan, can they do it then as it is separate from the 401(k)?

Company A wants to add a profit sharing element to the existing 401(k) plan. They want the vesting date for the profit sharing to be different from the employer match piece. The want the vesting date to begin on the effective date of when the profit sharing element is added and exclude all prior years of service. Reading Section 411, I don't think they can do that but they think they should be able to. Would help hear thoughts on this?