ADP restructured test

[Guest sritts]

If you have a rehire employee - what date would you use for the restructured test? The original hire date or the rehire.

example: rehire date 6/04/05, original hire date 1/1/03 (immediate elgibility)

calendar plan year - 12/31/05

want to use the maximum age and service for testing

what date would you use? the rehire date which would put the employee in the under group or the original hire date?

[Blinky the 3-eyed Fish]

You determine if he would be a plan participant had the plan had the maximum allowable eligiblity. You don't provide enough information to make that determination.

But let's say he was full time and terminated 9/1/2004. Well then he met the eligiblity requirements and would not be in the otherwise excludable group.

[Tom Poje]

I agree, info provided makes the answer unclear.

however, I have thought about the issue before. these stupid issues of rule of parity, break in service etc.

in the case of a 401k in which an ee has quit, I think the 'general' rule is immediate reentry - you cant exclude him later than that. if you operated under the 1 year of service rule, once he completes a year of service you have to retroactively let him enter. but that is impossible with deferrals, you cant defer on $ earned a year ago.

in the case of a profit sharing only plan, I think the answer is less clear. part of me says, yes, plan could require 1 year of service before reentry (even if it had immediate upon rehire). thus it would seem he could be treated as otherwise excludable. the problem is, after he complete 1 year, if he is treated as having a retroactive to date of rehire, then it seems like you would have to rerun the test from a year ago and include him.

but I have no basis for those comments except my own illogical way of thinking.