New eligible group

[Guest Philip2]

Client has existing 401(k) plan. Salaried employees were not eligible to participate. Client wants to make salaried employees eligible 10/1. Does the amendment have to be adopted before 10/1, that is, before these employees begin participating? Or do we have until the end of the year to adopt the amendment.

[J Simmons]

If you are wanting them eligible from 10/1 to the end of the plan year for purposes of their compensation counting in the allocation of a profit sharing contribution for the year, then you have until the end of the plan year to amend retro and make them eligible as of 10/1.

For 401k purposes, and their making elective deferrals, it is as a practical matter impossible to give them the retro opportunity to defer out of paychecks from paydays that have passed before the amendment.