max ellgibility for Safe Harbor

[Guest Big Al]

Just took over a dual elligibility 401k plan.

401k ellig was 1 year

PS ellig was 2 years with 100% vesting. No problems there

SH ellig was 2 years with 100% vesting

Can you really have a 2 year wait to get SH or is prior TPA all wet?

thanks

[Guest Sieve]

A safe harbor plan must first by a CODA (401(k) plan), and a CODA may not use a 2-year eligibility rule. (Code Section 401(k)(2)(D).) The prior TPA was all wet--or worse. (You can also follow this through the regs: SH plan must be a CODA--1.401(k)-3(a). CODA defined--Reg. Section 1.401(k)-6. A qualified CODA must meet no more than a 1-year eligibility requirement--Reg. Sections 401(k)-1(a)(4)(i) & -1(e)(5).)

[Tom Poje]

or, put another way,

anyone eligible to defer (with the exception of 'otherwise excludables') must be eligible for the safe harbor as well.