Coverage Testing in the year of an open enrollment

[Guest HollyT]

Can anyone tell me how to do coverage testing for a 401k plan in the year of an open enrollment? Plan's eligibility requirement is 2 months of service, but the service requirement is waived for employees employed on date X. This is a brand new business and the HCEs have less than one year of service, so the otherwise excludable rule doesn't help me. If anyone knows where I can find an example of how to do the test that would be most appreciated - there was no example in the ERISA Outline Book.

[Tom Poje]

you indicated that employees hired on x date were eligible. That means someone could have actually started work on that day, and therefore for would be eligible after working only 1 day.

Therefore, all employees who work 1 day are eligible. Thus, in your case, anyone who is showing up as ineligible would be treated as includable and not benefiting.

Interestingly enough, it appears you get a free ride on the ADP test, since you can treat all HCEs as having met statutory requirements!