Plan Amendment and Entry Date

[DP]

I have a client with a PS Plan with a 5/31 year end. Currently the plan's eligibility is Age 21 and six months of service. Entry date is on 6/1 after meeting eligibility.

Employee A, over age 21, was employeed 8/23/04 and should enter the plan on 6/1/05.

Client is wanting to amend his plan's eligibility to Age 21 and One Year of Service with the amendment effective 6/1/04. Will this keep Employee A from entering the plan on 6/1/05? Or since she has not entered the plan yet, will she fall under the new eligibility rules?

Thanks.

[JAY21]

In my opinion she has already satisfied both the age and service condition and is now just waiting the entry date. If she remains employed I would say she enters 6/1/2005.

I also don't see how they can amend the plan retroactive to 6/1/04 for changes that are more restrictive, though a liberalizing amendment (i.e., more generous) applied retroactively would be ok.

[WDIK]

Currently the plan's eligibility is Age 21 and six months of service. Entry date is on 6/1 after meeting eligibility.

If this information is complete, doesn't it fail to satisfy the requirements of Code Section 410(a)(4)(B)?

[R. Butler]

I have the same question as WDIK, isn't there a problem with 410(a)(4)? Under the facts provided employees may have to wait more than 6 months to enter the plan after meeting statutory age & service requirements.

As a general proposition why couldn't you delay, or possibly even eliminate, an employee's participation status by amending the service requirement?

[Bird]

Statutory service requirement is one year; the plan's 6 months requirement with entry on a single following date should always be OK.

I believe you can amend eligibility after a participant has satisfied the requirements. Do a search on "North Shore Auto" for a similar case.

[Blinky the 3-eyed Fish]

The entry date issue aside, I disagree with the conclusion that you cannot make eligibility more restrictive. There have been other posts on this subject, but basically, eligibility is not a protected right. You could even raise the eligibility requirement after a person has entered the plan. As long as you aren't cutting back a benefit earned, you are fine.

[R. Butler]

Statutory service requirement is one year; the plan's 6 months requirement with entry on a single following date should always be OK.

I believe you can amend eligibility after a participant has satisfied the requirements.  Do a search on "North Shore Auto" for a similar case.

Its the age. Wouldn't you need 20 1/2 for a single entry date following completion?

Also post indicate amendment would be 1 year with a single entry date following completion. Doesn't that also present a problem?

[Bird]

Its the age. Wouldn't you need 20 1/2 for a single entry date following completion?

Ah, good point. I'm guessing it was really 20 1/2 but we'll have to wait for the original poster to respond.

Also post indicate amendment would be 1 year with a single entry date following completion. Doesn't that also present a problem?

It doesn't say that they are keeping the single entry date but I agree that would be a problem.

[DP]

Sorry to be so long in responding. The amendment would be Age 21, 1 YOS with dual entry dates.

Thanks for all the responses.

[R. Butler]

I am assuming entry dates would be 06/01 & 12/01.

Based on the facts you've provided I see no reason plan could not be amended & thus have the effect of delaying entry for the employee in question until 12/01.

[DP]

Yes, the entry dates would be 6/1 and 12/1. Thanks for your response R Butler. That is what I was wanting to hear.