Testing Issues(?) different eligibiltiy for 401k and SH match

[Brian Gallagher]

Would there be any testing issues if a plan has different eligibiltiy for 401k and SH match? In this case, immediate eligibility for 401k and 6 mos for SH match.

(Plan allows for dual eligibility for SH).

[Tom Poje]

yes, no maybe so

the propsed regs have the following (this is from the preamble)

These proposed regulations would CLARIFY (emphasis mine) that, for purposes of determining whether an HCE has a higher rate of matching contributions than any NHCE, any NHCE who is an eligible employee under the safe harbor CODA must be taken into account, even if the NHCE is not eligible for a matching contribution.

I know, I know, they are only proposed. on the other hand, this does not read as a change to the law, but simply a clarification of the way you are suppossed to be doing things

.........

now, you are allowed to exclude 'otherwise excludables', but in your case you've got some people in the 6 - 12 month range who will get. Q-10 of 2000-3 simply says says a plan need not be satisfied with respect to both plans in order for one of the plans to take advantage of the ADP safe harbor. I think you are ok in regards to this, but you would be required to test otherwise excludables separately. this would eliminate the free ride on top heavy.