eligibility

[Guest Moira]

Our own plan is operating under a Corbel prototype document with immediate eligibility for deferrals (quarterly entry) and a 1-yr wait for safe harbor matching contributions. We are changing providers and the new provider is telling us their prototype document cannot handle such dual entry provisions. The big problem however is we hired 2 new people in the last 3 months who will be eligible to begin deferring under the current plan provisions on October 1. However, our new provider is telling us they will be again ineligible to participate once the new document goes into effect on or about November 2. I am trying to determine if this is really the case. It does not sound right to me that we would have to take away their ability to defer once they have met the eligibility and entry requirements. Would appreciate your thoughts.

[Guest Moira]

Just did some digging in the ERISA outline book and evidently this is correct. I will talk with the provider about "grandfathering" in those who had previously met eligibility. But I didn't realize the right to defer is not a protected benefit! You learn something new every day.

[david rigby]

... the new provider is telling us their prototype document cannot handle such dual entry provisions.

Is this an acceptable result, to the plan sponsor?

(I thought it was pretty common for vendors to handle both provisions. Seems like the sponsor should be dictating plan provisions, not the vendor.)

[BG5150]

I don't see what the problem is for the two or three people. As long as they are participating at the time of the effective date of the new plan they should be okay. Who cares if they start participating on Oct 1 2009 or Oct 1 1999?

[rcline46]

The new vendor has a very poor document if this is the case. Get a copy of their adoption agreement (I will bet it is a standarized prototype) and read it. Who is the new vendor, maybe someone on the board has experience with the document they are providing and can help you.

[K2retire]

The issue may be that the vendor chooses not to work with dual eligibility provisions. In that case, you will have to decide if you choose to do business with them.

My current employer wouldn't touch such a provision. We cater to very small plans, offer extremely limited options, and charge next to nothing in exchange.