Eligibility Requirements

[Guest LoloV]

Does anyone know if a special test, etc. would be required for a plan with the following eligibility requirements:

Exempt ee's - 3 months of svc / entry on 1st of mo following

Non-Exempt ee's - 6 months of svc / entry on 1st of mo following

I can't find anything specifically talking about this and maybe nothing additional is required. It just seems a little odd to me.

Thanks

[Mike Preston]

You are ok under 401(a)(4), typically, because you are providing additional benefits to a group of people (Exempts with between 3 and 6 months of service) that would probably be 100% NHCE's.

The only time I might be concerned would be if the timing of the amendment was intended to generate a benefit for those who are HCE's. An unlikely scenario.

[Tom Poje]

yes, you have to test coverage using the lowest eligibility requirements.

In a calendar year plan everyone hired before 9/2 is includable, whether they come into the plan or not.

Actually, that is a rather simple way of looking at it.

Consider also the following. 2 people both hired 5/1, one in the exempt group, one in the non exempt group. Both quit on 10/1.

Both are includable, even though only one entered the plan.

Chances are, using 'otherwise excludable' option, you wouldn't have a problem, but if you had 5% owners who were hired in the exempt group, they would enter the plan, but you would have a bunch of NHCE, nonexempt group who didn't enter, clearly discriminatory

[Guest LoloV]

Thank you for the replies.