changing to 1000 hours/last day requirement in mid year

[Santo Gold]

401(k) plan currently has no hours requirement and no last day of employment requirement for participants to share in the profit sharing contribution. The employer is looking to change this to 1000 hours/last day required to share in the contribution. For participants already in the plan, this would not be allowable, but what about for new participants, scheduled to enter the plan on 7/1/06. Could the plan be amended before then and applied to any new participants entering the plan after the amendment date?

[Belgarath]

I would say yes.

[A Shot in the Dark]

I would say no, if the participant due to enter on July 1 obtained 1,000 hours. prior to the amendment being completed.

[Archimage]

Doesn't matter. He was not a participant at that time and since he is not a participant he has not a accrued any type of benefit from the plan.

[wsp]

While you can modify the plan to add those eligibility requirements, depending on the company and the number of people who have yet to become participants, it may make more sense to make all current employees eligible and make the stricter eligibility requirements applicable to new hires. Bad PR and a few disgruntled employees can cost far more than the expense involved in making a few employees eligible early.