Last Day of Plan Year is Plan Entry Date

[Guest]

I am currently reviewing a calendar year profit sharing plan that states the following under Eligibility: each employee becomes a participant in the plan on the plan entry date immediately following the later of the completion of one year of service or the date he attains age 21, "plan entry date" means every June 30 and December 31.

My questions are these: does this plan satisfy the requirements of 1.410(a)-4(B)(1), that an employee must commence participation no later than the earlier of (1) the first day of the plan year beginning after the date the employee met the eligibility requirements, or (2) the date six months after these requirements are met? Is the plan document required to have a "first day of the plan year" entry date? When would a full-time employee, age 21 or older, hired on January 1 enter the plan?

[Bill Berke]

Yes, from what you've written the plan seems okay. If you chart out the actual dates for your employee, you will see that the employee particpates within the eighteen month requirement of 410. Your employee would participante the following June 30 - upon completing 12 months of service. Exactly 18 months from hiredate - and in compliance with 410

[This message has been edited by Bill Berke (edited 05-08-2000).]

[This message has been edited by Bill Berke (edited 05-08-2000).]

[This message has been edited by Bill Berke (edited 05-08-2000).]

[Guest]

Do the regs. under 1.410(a) require that the participant enter the plan on the following January 1 (i.e., the first day of the plan year beginning after the date the employee met the eligiblity requirements) and not the following entry date of June 30? I interpret the regs. to require that this employee enter the plan on January 1 and not wait until June 30. I think the plan must have a January 1 entry date to accomplish this.