Early entrant into 2 person profit sharing...

[Guest RONNIE WASEL]

Employer has plan where he has been only participant for years. It has a two year eligibility period based on anniversary dates, with semi-annual entry dates.

Employer's sole employee was hired on 7/17/2000 and worked full time. At the end of 2002, employer put in ps contribution for himself and this employee under the idea that she was eligible.

Upon research, it appears that she would not be eligible until 1/1/03 and thus no contribution. Employer wants her in.

Is it possible to amend the plan retroactively to 1-1-02 to have quarterly entry dates, thus making her eligible as of 10-01-02?

In the past the D.O.L. has not frowned on this type of situation because it is favoring the non-highly compensated and getting them into the plan quicker.

Thoughts?

Thanks,

RW

[Mike Preston]

EPCRS says this is ok. I think you have to submit the amendment, though.

Are you sure the person is not a participant? Check the eligibility computation language. If it says that it runs from date of hire to one year anniversary and switches to plan years, this person is eligible in 2002. Of course, I know you already said that you checked, but maybe check one more time!