Retroactive Entry on a 401(k) Plan.

[jquazza]

I have a Simple 401(k) plan that was designed with a 1-year eligibility requirement and one entry date, the first day of the plan year in which the employee met the eligibility requirement (not the best plan design by any standard.)

Now, say a participant was hired in December 2002. His one year of service is in December 2003 and therefore is entry date is 01/01/2003. He didn't have the opportunity to defer as he quit shortly after his one year anniversary.

Should the employer be obligated to contribute a QNEC for him (in the amount of the NHCEs average?)

What if if was hired in June and did not quit, would that make a difference?

[jquazza]

So, nobody wants to take a stab at this one?

The situation must be scarier than I thought!

[E as in ERISA]

While the IRS hasn't addressed this issue in regs, I don't think that this is generally considerable a viable entry date for a 401(k) plan. I think you'd not only want to fix this participant with a QNEC, but also consider changing the entry.

[WDIK]

So, nobody wants to take a stab at this one?

I think you should definitely stab this one.