Safe Harbor 401(k) and different eligibility requirements for hourly and salaried employees

[Guest lawclerk]

Is it possible to set up one safe harbor 401(k) under which salaried employees are eligible after 30 days of employment and hourly employees are eligible after 12 months of employment? Are there any possible complications that this could cause?

Any help would be greatly appreciated!

Thanks.

[Jim Chad]

In English, I would answer by saying that all Plans will have to be tested together for coverage and nondiscrimination. This probably will not work if the HCES are all in the salaried Plan.

This would be a good time to involve an experienced, Third Party Administrator (with good Pension Software).

[Guest lawclerk]

In English, I would answer by saying that all Plans will have to be tested together for coverage and nondiscrimination. This probably will not work if the HCES are all in the salaried Plan.

This would be a good time to involve an experienced, Third Party Administrator (with good Pension Software).

My understanding of the IRC is that if the 401(k) is a safe harbor plan under 401(k)(12) then the nondiscrimination test is satisfied. The only bar it seems would be the coverage test under 410(b)(1). And, if there are two different service standards, as soon as the hourly employees reach 30 days of service they would be includable for purposes of the coverage test but would not be benefiting because they are "otherwise excludable".

Please let me know if this seems like a correct assessment.

Also, are there any 401(a)(4) issues with BRFs?

[Tom Poje]

I would agree. It is possible to have 2 separate plans.

Permissive aggregation rules (unless you have a bad situation of someone in both plans requiring mandatory aggregation)

Since you don't have to aggregate, if you can get past coverage you should be ok.

If you have to aggregate, then you have to use the same method

[Guest lawclerk]

I would agree. It is possible to have 2 separate plans.

Permissive aggregation rules (unless you have a bad situation of someone in both plans requiring mandatory aggregation)

Since you don't have to aggregate, if you can get past coverage you should be ok.

If you have to aggregate, then you have to use the same method

Is it possible to have two spearate service requirements for participation the same plan or is it necessary to have two plans?