Plan entry dates

[Guest KWarren]

For a plan with a 1/1 entry date, do the members have to be enrolled ON 1/1 or can they enroll at any time during that month?

[R. Butler]

Generally it depends on the document. Many documents provide that participants can start deferrals at any time, other documents have more restrictive provisions.

They do need to be giving the opportunity to enroll on the 1/1 date regardless.

[Guest KWarren]

Thanks RButler!

[Kirk Maldonado]

Don't forget about the Section 410(a) rules regarding when participation must commence following satisfying the eligibility conditiions.

[mbozek]

If an employee is eligible to participate in a 401(k) plan as of 1/1 they should be allowed to commence salary reduction beginning that date. While they do not have to be enrolled on 1/1 they must be given the opportunity to commence salary reduction as of 1/1. What other options are there?

[Guest Rosemary Raymer]

In a new 401(k) plan, it can be effective 1/1 but salary deductions begin later in the year. It just can't be staggered, everyone eligible starts at the same time.

[austin3515]

With a 401(k) it seems to me that the most important thing is that people aren't let in BEFORE the plan entry date. So if someones ENTERS the Plan on 1/1/03 (after meeting elig requirements in November 02), but joins in February, even though the next entry date isn't until July 1, no big deal because he IS a participant in February and therefore able to excercise his rights to change his deferrals. So unless the doc says you can only CHANGE deferral elections once a quarter, no problemo. Can someone confirm? I've run into this many times.

That comment on 410(a) also seems important, unless the Plan's eligibility is automatic on 1/1 regardless of hire date. You can't have retroactive participation in a 401(k), and can't make em wait more than a year. Kwarren, is there also a 7/1 entry date?

[Guest Jennifer Reid]

Generally, the entry date is the date upon which an employee who has met the eligibility requirements automatically becomes a participant in the plan, and he may elect to defer compensation into the plan at any time on or after that date. His coverage and participation in the plan are not governed by whether or not or when he actually makes a salary deferral election.