Existing business, new plan Eligibility?

[Guest rickw]

Client has been in business several years and wants to set up new Plan. One employee was hired 12/20/06. I would prefer not to automatically include everyone employed as of 1/1/07.

In lieu of Dual Eligibility, can I simply base eligibility on Hours and Year of Service prior to new plan? If so, with dual entry dates, that employee would not participate until 1/1/08, but existing employees with over one Y of S as of 1/1/07 would be be eligible 1/1/07 (as though the plan had always been in existence)? Thanks!

[Guest Pensions in Paradise]

Yes. Indeed, this is how most new plans are set up.

[Guest rickw]

So, just what is Dual Eligibility in the first Plan Year all about? Mostly for a new business with no prior service? Thanks!

Yes. Indeed, this is how most new plans are set up.

[stephen]

In this example, dual eligbility would impact eligbility if the plan required 6 months of employment and had entry dates 1/1 and 7/1.

[Guest rickw]

In this example, dual eligbility would impact eligbility if the plan required 6 months of employment and had entry dates 1/1 and 7/1.

I am not sure what example you are referring to, unless that is my basic question about a new plan for an existing company. If the plan requires 1 year employment and 1 year of service with entry dates 1/1 and 7/1, I would like to know if all employees qualify as of 1/1 in first plan year if they met the service conditions by counting their employment history prior to the formation of the plan.

Likewise, could we exclude someone hired in December, say, three days before the new plan is effective, and make them wait until 1/1 of second year?

I am hoping to avoid simply letting everyone who was employed at 1/1 automatically qualifies, regardless of prior history.

Thanks!

[Jim Chad]

For eligibility, all service with this employer would be counted, even service before the Plan was set up. So if your eligibility requirements were 1 year of service and age 21, all employees who have met this would come into the Plan on 1-1-07. The employee hired 12-20-06 would not come in until 1-1-08 if you have the usual dual entry dates.

What people usual mean by dual eligibility is when you have these eligibility requirements and you put a paragraph in the document waiving them for anyone employeed on a certain date. Then when you hire someone after that specified date you have two groups of empoyees with different eligibility rules. One group had immediate entry and the other has to wait one year.

[stephen]

What I meant by in this example is the calendar year plan you referred to in your origninal post and the employee hired 12/20/2006 is that you could set up the plan for age 21, 12 months of service with 1,000 hours and the employee noted would be excluded from participating until they met the requirements and reached an entry date. The earliest this employee could enter the plan would be 1/1/08 as noted above. However, you could set up the plan to allow for 6 months of service to be eligble with dual entry (1/1 and 7/1) and the employee noted above would enetr the plan 7/1/07. Also, note if you have the 1,000 requirement and the employee hired 12/20/06 never meets the hours requirment they will not become eligible to enter the plan.

[Kimberly S]

Client has been in business several years and wants to set up new Plan. One employee was hired 12/20/06. I would prefer not to automatically include everyone employed as of 1/1/07.

In lieu of Dual Eligibility, can I simply base eligibility on Hours and Year of Service prior to new plan? If so, with dual entry dates, that employee would not participate until 1/1/08, but existing employees with over one Y of S as of 1/1/07 would be be eligible 1/1/07 (as though the plan had always been in existence)? Thanks!

If you want to exclude the 12/20/06 new hire, but inlcude others with less than 1 year of service, you can set your waiver date to 12/19/2006. It does not have to coincide with the effective date of the plan.