Eligible Participants in New Plan

[DP]

I'm setting up a new Safe Harbor 401k Plan effective 1/1/03 for a dental practice that began 1/1/03. The 401k portion will be effective 10/1/03. A non-elective contribution will be allocated to all participants who worked 501 hours if terminated or are an employee as of the end of the year.

Eligibility is Age 21 and One Year of Service. In order to make contributions for 2003, we were allowing all employees as of 1/1/03 to enter the plan on that date if they had met the age 21 requirement.

There was one fill-in employee who was on the payroll 1/1/03. This employee will not work 500 hours during 2003. From what I understand, this fill-in employee will become a participant as of 1/1/03 and will be entitled to the 3% Safe Harbor contribution. She will also be entitled to any non-elective contribution if she is still employed as of 12/31/03.

Am I on the right track here? Thanks.

[R. Butler]

Seems to me that you are.