Contribution to a Terminated Participant?

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A plan is put into place in October, 2005 with an effective date of 1-1-2005. An employee terminated in August, 2005 and would have entered the plan had they still been employed. A SHNEC is being made for 2005. Should this terminated employee be entitled to the contribution?

[rcline46]

One of the document options permitted by the IRS is comp for the SHNEC can be based on comp while eligible for that portion of the plan. Soooooo - what does your doc say?

Note that deferrals for anyone could not be made prior to 10/1/05. Now the PSP piece could use full annual pay for the contribution.

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Had the EE been employed when the plan was implemented, he would have entered on 7-1-2005. Would you agree that this EE should get a contribution for that short period of time?

[rcline46]

Now you confused me! Where did the 7/1/05 come from??? Quarterly entry?

Any Profit sharing contribution?

You didn't say what the definition of compensation was for the SHNEC, and we did not discuss the entry date for the k portion. Reference an earlier thread on 'comp while a participant' where plan was effective 1/1, signed in May, and deferrals started in August and the participants were notified that that was the start date.

So - Comp definition and K entry date will control.