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For off-calendar year plans that use anniversary year for the first eligibility computation period (ECP) and plan year thereafter, when is the first date an employee could become eligible as a LTPT employee? Example: · 9/30 plan year end, ECP switches to PY after the first ECP, semi-annual entry for LTPT EEs · Participant hired 7/1/2021. · ECP 1 = 7/1/2021 – 6/30/2022 · ECP 2 = 10/1/2021 – 9/30/2022 · ECP 3 = 10/1/2022 – 9/30/2023 · Assuming Participant had at least 500 HOS in each ECP above, should this participant have entered on 10/1/2023? Do off-calendar year plans need to use anniversary year for 2021 - 2023 to avoid this result? Just thinking about SECURE 1 interim amendments, which many have already done! SECURE says: (b) EFFECTIVE DATE.—The amendments made by this section [112] shall apply to plan years beginning after December 31, 2020, except that, for purposes of section 401(k)(2)(D)(ii) of the Internal Revenue Code of 1986 (as added by such amendments), 12-month periods beginning before January 1, 2021, shall not be taken into account. Presumably, that means 12-month periods (ECPs) after 12/31/2020 DO count for LTPT purposes.

Have a bit of a weird scenario here and unsure how to proceed. We are getting ready to onboard Company X, who will be offering its employees a 401k for the first time. However, Company X acquired Company Y recently in a total stock purchase. Company Y has an existing Safe Harbor plan. Our belief is that Company X is now the sponsor of that plan. Is that correct? It isn't a merger of plans because there was no plan at Company X to merge with. If Company X is in fact now the sponsor of that Company Y plan, how can we get rid of the Safe Harbor provisions (Company X did not want a Safe Harbor plan)? Are Company X's employees eligible for the plan right now if they meet the general eligibility requirements? We believe yes. Can the SECURE Act provisions around Safe Harbor be utilized here for making a midyear change? Thanks in advance for any insight or suggestions!

FACTS: CA employer sponsor Safe Harbor 401k plan Eligibility waiting period is 1 Year of Service (12 mos, 1000 hrs) Plan Entry Dates: 1/1 and 7/1 coincident with/following waiting period Employee "A" is hired 3/15/2019 on full-time basis. Projected Entry Date is 7/1/2020 On approximately 1/15/2020 "A" apparently moves and does not show up for work, without any notice to CA employer/plan sponsor. Sometime thereafter the CA employer learns "A" claims to have become disabled since moving and has filed for state (and/or Federal) Disability; "A's" request is denied apparently due to failure to satisfy Disability requirements. "A" did work > 1000 hours from Date of Hire (3/15/2019) to the last day "A" reported for work (approx 1/15/2020). To date, "A" has not been in contact with the CA employer/plan sponsor. The CA employer does not want to send a termination notice in as it fears "A" may try to sue, claiming terminated due to disability. The CA employer/plan sponsor wants to know if "A" must be provided with enrollment materials at this time (based on 7/1/2020 entry date). They would prefer not to reach out if it is not necessary. The Plan provides: 1.63 "Period of Severance" means a continuous period of time during which an Employee is not employed by the Employer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the twelve (12) month anniversary of the date on which the Employee was otherwise first absent from service. QUESTIONS: At what point is "A" no longer an employee of the employer? If "A" is still an employee, albeit an "inactive" employee, when is the employer obligated to provide Enrollment Materials? If "A" is still an employee, albeit an "inactive" employee, what determines termination/severance from employment? Does CA employment law provide a standard for this situation, or, any federal guidelines? It seems worst case scenario is "A" continues to be an employee, and, since "A" has 1000+ hrs and more than 12 mos have elapsed since DOH, "A" is eligible with an entry date of 7/1 - or is it the date "A" returns to service if later? Failure of employer to provide Enrollment Materials at this time (or later if eligibility entry date is later date) can be corrected... but if "A" earns zero the correction will result in $0 contributions due. Any help and/or insight is appreciated. Thank you.

We have a client that is bringing on board a new physician assistant. Their 401(k) Plan has a one year of service with semi annual entry dates. They want to amend the Plan to allow this employee to participate immediately. Any thoughts on amending the Plan and under eligibility naming this individual specifically as being a participant in the Plan? I am told this employee will be compensated well below the HCE limit (around $90,000 a year maximum compensation). Thanks in advance.

A plan is on a calendar year. EE is eligible to participate on their date of hire, and the entry date is the first day of the month coinciding with or next following the date they satisfy the eligibility requirements. EE was hired on 11/25/2015 and is >21 years old. There is no termination date. Until what date are they still considered otherwise excludable based on: Option 1: The group includes participating employees who have not satisfied the IRC Section 410(a)(4) entry date period applicable to them – in other words, they are treated as otherwise excludable employees until the earlier of the first day of the next plan year after attaining age 21 and completing one year of service or 6 months after satisfying such requirements. This is the maximum waiting period under the Code. Any comments or thoughts would be much appreciated! Thanks!

Good morning to all, We have a client, a medical practice, with one owner-doctor, 100%, and two non-owner doctors, along with some rank and file employees. The plan was set up to exclude "non-owner doctors" from eligibility to participate in the plan. All the doctors are HCEs. Now, the owner-doctor would like to make an offer of employment to a new non-owner doctor and he wants to make the plan available to just this new non-owner doctor but not the two non-owner doctors he already has. We were thinking about amending the plan to simply exclude the two existing non-owner doctors by name. As we have never done that before, we are not 100% comfortable doing it without asking the advice of the experts. Would you do it that way or is there another technique? As an aside, every year when the rate group testing is done for the new comparability profit sharing contribution, our software includes the two existing non-owner doctors in the test, even though they are not eligible to participate in the plan. We are not 100% comfortable with that, either, and would like to know if this is really right. The fact that they are HCEs and they do not get a contribution helps to pass the tests and that doesn't really seem "fair" but if it is permissible, we will continue to take advantage of it. Thank you in advance for your advice!

We have a sponsor and additional adopting employer who are acquiring the assets and employees of numerous companies, who want to credit prior service. Is it permissible to have some sort of catchall language that credits prior service with all companies that will be purchased instead of amending the plan each time and listing out all individual companies? The ERISA books didn't seem to address the situation and the FT William document sections says list each company. Just asking because I think I've seen Relius documents in the past have such a catchall provision. Thanks in advance.

Employee was hired on 1/15/18. Employer laid off employee on 2/15/18. Employee was rehired on 5/7/18. Plan has 90 day service requirement to be eligible for the plan. Contributions can start on 1st day of the month following the month when 90 day service requirement is reached. I've seen plenty of examples if the employee terminates/quits/is fired/etc. Is a layoff viewed in the same way? In most examples I see, it appears that time from 2/15/18 to 5/7/18 wouldn't even be considered a break in service. Is this correct? My thought is that as of 6/6/18, employee has completed 61 days of service (1/15-2/15 and 5/7-6/6). The time in between doesn't count and 29 days from now, on 7/7/18, the employee is eligible. Entering on the 1st day of the following month would mean employee is eligible to contribute and get employer match beginning on 8/1/18. Can anyone confirm or correct me? Thank you!

Sole proprietor has a Safe Harbor 401k plan and has himself and the two other employees participating. Employer forms a C Corp and starts a new Safe Harbor 401k plan, terminating the Sole Proprietorship and Sole Prop 401k plan and transferring all employees and balances to the Corp 401k plan. Employees are doing the same jobs as before. "Same Desk" Is my understanding correct that service with Sole Prop plan transfers to the Corp plan?

Have a 401(m) plan, looking at eligibility requirements. Plan sponsor is composed of approximately 60% full-time hires and 40% .4 FTEs or less (most of this group are .01 or .1 FTEs). Sponsor would like to set eligibility as follows: Age: 21 Minimum Service: "employee regularly works more than 20 hrs per week" Initial eligibility would be determined by employee FTE at hire date (per employment contract). If .5 or higher - eligibility would be met and employee would enter next payroll period. If employment contract is for less than .5, employee would be ineligible unless worked more that 1,000 hrs in plan year. In this case, employee would enter next payroll period following the completion of the year of service (e.g. 1000hrs). Looking into whether the service requirement (and eligibility procedure) would meet 410(a)(1)(A). Relius - the plan document provider - says yes, as the procedure would identify employees meeting the 1,000 hrs requirement and would include them in the plan (and therefore meeting 410(a)(1)(A)). But I'm slightly uneasy as I haven't seen any precedent for this procedure. Welcome any thoughts.

I know a plan can have secondary eligibility say for people hired after a certain date for example but can I plan also have multiple eligibility provisions depending on job class? For example bank tellers are eligible to enter the plan after three months of service and loan officers have to wait one year and 1000 hours to be eligible.

Company started in May 2016. Owner is only employee until September. Is it ok to design plan excluding employee? I seem to remember something (that I can't find) about applying most liberal eligibility requirements in first year for the/a coverage test. And since the only NHCE would be excluded I would have a problem. Any basis in fact or did I dream that one up? Thanks

I have a single owner LLC that files as a sole proprietorship. The LLC has been in existence for 3 years. It purchased the assets of a going business 2 years ago. He had no employees prior to the purchase. If the qualifications are 3 out of the last 5 years, is the owner the only qualified person? If so is it top heavy? If it is top heavy, and he wants to contribute 25 % for himself, how much does he contribute for employees and do they have to meet the qualifications of a participant or is it for all employees that worked? He does have 1 employee that came from the purchased company that is still with him.

Short Version: A buys B in asset purchase. B has no plan. Can A amend to allow everyone employed on "x" date to enter plan, then revert back to requiring age 21 and 1 YOS? Long Version: "A" has a 401(k) plan requiring age 21 and 1 YOS. Dual entry: 1/1 and 7/1. A has 1 employee - Joe. Joe is very part time and would never be covered by plan. April 2016, "A" buys "B" in an asset sale. B has no plan. A hires all of B's employees. Some are under 21. A wants to allow Joe and all of the new B employees to enter the plan August 1st. After that, age 21 and 1 YOS are to apply to all new hires. If we simply amend to count service at B, Joe is still out. And, some B's are younger than 21, so they are still out. Any problem with amending such that everyone employed on August 1st is in, regardless of age and YOS, then revert back to age 21 and 1 YOS?

Good evening, I could use some help in determining the entry date for an employee who, on two occasions, worked a short period before terminating, and was ultimately hired full-time after his second termination. He never met the service requirement prior to being terminated on either occasion, but currently has satisfied it. The potential issue is, the plan sponsor allowed the employee to participate on the entry date following his satisfaction of the service requirements following his most recent hire date, but I am of the opinion that he should not have been allowed to enter the plan until the beginning of the most recent plan year. Plan specs are as follows: Plan Year is 11/1 - 10/31 Plan eligibility is 1 YOS/Age 21 with monthly entry dates Actual hours counted (1000) No BIS rules apply ECP shifts to plan year after initial ECP ends Paraphrasing & summarizing plan's master document provision regarding rehired Eligible Employee who failed to satisfy eligibility requirements: for purposes of applying any shift in ECP, employee's prior service is taken into account and employee is NOT treated as a new hire (emphasis mine). Employee data is as follows: Birth date: 6/27/90 Initial Hire date: 6/28/10 Initial Termination date: 8/25/10 1st Rehire date: 5/11/13 2nd Termination date: 8/16/13 2nd Rehire date: 5/12/14 Plan sponsor allowed EE to begin participation after 6/1/15 Hours worked during ECPs (using my understanding of plan document): 6/28/10 - 6/27/11 - 246 11/1/10 - 10/31/11 - 0 11/1/11 - 10/31/12 - 0 11/1/12 - 10/31/13 - 527 11/1/13 - 10/31/14 - 960 11/1/14 - 10/31/15 - 2080 The plan sponsor, I believe, began a new ECP as of 5/12/14, and has credited the employee with a year of service as of 5/11/15, allowing him to participate as of 6/1/15. I believe that, since there are no BIS rules in effect, and the plan document does not seem to allow for "resetting" the ECP to his latest rehire date, that he should not receive credit for a YOS until 10/31/15 and he should not be allowed to participate until 11/1/15. (Our recordkeeping software agrees with me, not that that means anything.) I actually hope I am wrong on this one because the employee has been making deferrals since June 2015 and received an employer contribution for 10/31/15, so corrections would be in order if I am right. Thanks to anyone who read this far...

Good afternoon, All - We have a client looking to: 1. Exclude from 401(k) plan eligibility lawful permanent residents (LPR's) of the U.S. who are on both U.S. AND home country payroll, and 2. Exclude from 401(k) plan eligibility certain visa holders -- just as a general rule on its own in the plan document or in combination with being on both U.S. and home country payroll. Knowing that it's a Safe Harbor Plan that passes minimum coverage testing, can one or both of the above be done without being deemed discriminatory? Help and guidance is GREATLY appreciated. Thank you. Brian

If a company adopts a 401(k) plan midyear retroactively to the beginning of the year and an employee met the eligibility requirements at the beginning of the year, but terminates employment prior to the adoption date, must he be included in the 401(a)(4) testing? Must he receive the 3% non-elective safe harbor contribution?

Client opened a SEP with bank in 2009. Client does not have original paperwork and claims to not have prepared SEP plan doc. She funded in 2009 - 2013 (in 09-10 based on schedule c, from 2011 on she incorporated and based contributions on w-2). She hired an employee in 2014 who earned $65,000. Files taxes on 1120s and is on extension. Wants to fund for 2014 but wants to exclude employee. Can client exclude the employee from the plan? If not, can client start a new and separate SEP for employees other than owner?

When a plan does a dependent eligibility audit and does not receive supporting documentation it requests for participants it now assumes may not be covered, what are the rules for removing a covered person or their beneficiary? What documentation can a plan request?

I have a plan that excludes "full-time students", and then goes on to define "full-time students" as follows: an Employee is a full-time student for any period during which the Employee is enrolled as a full-time student or is between academic years/terms at an educational institution and there is reasonable assurance the Employees will be a full-time student the next academic year/term. The plan does not include a 410(a) failsafe for eligibility, so I assume someone thought this would be a reasonable business classification not based on service. I am just digging into this, and am trying to figure out what I need to know to evaluate this. Do I need to know if there are both full and part-time employees that fall into this classification? Seems that even classifications that end up excluding only part-time employees could still be legitimate business classification...for example, all the employees at location A are part-time and the plan excludes location A employees. Since the employer/plan sponsor wouldn't have any control over whether an employee is a full-time student, how can this be a legit business classification? What if a full-time student decided not to go back to school, when would they enter the plan? Can someone help me get my head around this one?

Takeover client's 401(k) plan eligibility requirement is: "Eligibiiitv: All employees other than excluded classes shall become a participant with respect to employer contributions on the entry date on which the participant first meets the following requirements: (I) Attains age twenty-one (21) and (2) Completes 500 hours of service." The 1000 hour year of service rule applies after the first year. Entry dates are semiannual. Plan has been administered as requiring 500 hours of service AND 12 months of employment, and then entering the plan on the next semiannual entry date. (It seems to me that, in the past, anyone who completed 500 hours of service at any time within the first 12 months of employments should have entered the plan on the next entry date, and not until the first entry date after 12 months of employment, so there may be corrective contributions to make.) At any rate, we are now preparing the PPA restatement. Client wants to have a "500 hour and 12 months of employment" rule to permit part time employees into the plan, as long as they work over 500 hours annually. Client does not want to let employees with less than 500 hours per year (there are some) into the plan. We can elect eligiblity requirements in our volume submitter document that would provide: "Any Eligible Employee who has completed 500 Hours of Service within 12 consecutive months from the initial date of employment and has attained age 21 shall be eligible to participate hereunder as of the date such Employee has satisfied such requirements." The question is regarding the phrase "as of the date such Employee has satisfied such requirements." Similar language appreas in other prototype and volume submitter documents that I checked. I thought that, unless a plan used the statutory "year of service" definition, that any lesser hours requirement for initial eligibility had to provide for eligibility "as of the date the requirements are satisfied." So, in our document, as in the existing EGTRRA document, if a full-time employee meets the 500 hours requirement after 3 months, he would enter the plan on the next entry date, NOT after 12 months. An associate has recommended using the "other" option in the volume submitter document to say: "Any Eligible Employee who has completed 12 CONSECUTIVE MONTHS OF SERVICE in which he has at least 500 Hours of Service and has attained age 21 shall be eligible to participate hereunder as of the date such Employee has satisfied such requirements." That would appear to require both 500 hours of service AND 12 months of employment, but I am still thinking that the use of both hours and months (and NOT using the statuory "year of service" definition) would still require the plan to count the hours and bring employees into the plan on the next entry date after the 500 hours are met. Any thoughts would be appreciated

We had a Safe Harbor 401(k) plan in 2013. During that year we adopted a Cash Balance plan. It had started with an eligibility window that brought in Employee "A". ("A" is not eligible for the 401(k) Plan in 2013 as of the date of this post.) Turns out, the plans cannot satisfy the Special Gateway requirement because "A" did not get a benefit in the 401(k) plan. The perfect solution would be to adopt a corrective amendment within 9.5 months admitting "A" into the 401(k) plan and giving him the same 7% as all others. Question: Would a corrective amendment that admits a new participant constitute an impermissible (mid-year) amendment of a Safe Harbor plan? I think it is permissible because it does not conflict with anything in the 2013 Safe Harbor Notice. It is also the kind of amendment that IRS says it would be inclined to permit (but to my knowledge, they have not yet expressly permitted). What do you think? Thank you very much.

Company A acquires Company B through a stock purchase. Company A’s plan requires 1 year of service and as quarterly entry dates (1/1, 4/1, 7/1, 10/1). Company A acquired this company on May 1, 2014. Am I correct in my thinking that the employees of Company B that have been there 1 year would all enter the plan on 7/1/2014? What code section supports this conclusion? My guess it is somewhere in the controlled group regs. Is there a private letter ruling possibly on the subject? I am trying to give the client an example to support my

A financial advisor has indicated that a client of his through his CPA has set up a SEP plan that indicates an employee has to be employed as of the last day of the plan year to be eligible to enter the plan. The company has seasonal employees and doesn't want to cover them even though they have met the eligibility requirements. From my research, there is no indication that entry dates apply to SEP plans and therefore once an employee has meet the eligibility requirements they would be in the plan even if they were seasonal employees who only worked during certain periods of the SEP plan year (12/31). I would greatly appeciate it if someone can confirm that I'm on the correct path. There are examples of determining eligibility on the IRS/DOL website for SEP plan but thought I would pose the question on here as well. Thank you in advance for your response. Dianne

I have an employe who has worked for a company for 4 years. However, he never worked 1000 hours in any of those years. For the 2013 plan year he worked 1000 hours and is now eligible. The plan's entry dates are 1/1 and 7/1. Which entry date do I use for him? Does he come in 7/1/2013 since that is when he met 1000 hours or would it be 1/1/2014?