Dual eligibility on 5 year old plan

[Jim Chad]

One doctor has a corp and a 5 year old 401(k) Plan with the usual 21 and 1 year and dual entry dates.

New doctor will start a corp and the 2 corps will form a partnership. They would like the new EGTRRA document to waive eligibility requirements for the doctor and his wife by waiving requirements for anyone employed on or before October 1, 2008.

How exactly would this work? What would we do with the nurse hired 2-01-08. Would we just let her in on October 1st or is there something else we would have to do for her? How about the receptionist hired November of 2007?

I have read that this is a Benefit, right or feature that must be tested for coverage.

On 12-31-08 testing:

Who is benefiting?

Who is not benefiting?

Who is excludable?

[QDROphile]

I am curious about the wife.

[ERISAnut]

You can amend a plan at any time to provide that all employees as of a certain date are eligible while employees hired on or after the date will have to meet the 21 and 1 requirements. So, anyone who is currently employed, and anyone who his subsequently hired between now and October 1, will become eligible for the plan.

This provision will have a special effective date of "current date" at the time you amend the plan. Prior to that time, the provision of 21 & 1 would apply.

Anyone who is currently employed will become a participant in the plan immediately (on the effective date of amendment). Also, any new hires up to October 1st will also enter the plan on their date of hire.

The point you have to realize is that for the individuals who are currently employed (but have less than 21 & 1) will become participants in the plan on the effective date of the amendment. Normal testing rules will apply. There's no benefit, rights & features issue.

[Jim Chad]

Thank you for the answers. His wife will be in the office working mainly with collecting from insurance companies.

[Guest Sieve]

Jim -- Note that changing the rule every time there is a new doctor to permit immediate entry of the doctor, then making the rule more restrictive, then relaxing if for a new doc, etc., etc. could result in discrimination as a result of the full series of amendments looked at in the aggregate.

[Kevin C]

Also note that the timing of the amendment can cause it to be discriminatory. See 1.401(a)(4)-5.

You will want to make sure the amendment brings in NHCE's along with the HCE's.