Plan Effective date < Corporate Date if Incorporation

[rblum50]

I could be wrong on this, but, I remember reading somewhere, sometime ago that if a company incorporates after the beginning of a year, the Effective Date for the plan could still be established as the first day of that year in order to avoid short yeat limit pro-rations. I have a potential client that will incorporate around September 1st of this year and I was wondering if there was any way the plan's Effective Date could be made January 1, 2010?

[PensionPro]

You can avoid the short year limit pro rations by ensuring the document defines the limitation year as the 12-month period.

[rblum50]

You can avoid the short year limit pro rations by ensuring the document defines the limitation year as the 12-month period.

It's as simple as that? This would effectively avoid what would otherwise be prorations to compensation, integration limits and benefit limits?

[austin3515]

Controversial, but nothing to say it is wrong. ERISA Outline Book goes over this, and some people definitely say it can be done.

[rblum50]

I don't think that I made myself clear. The company I am referring to will come into existence and incorporate let's say August 1,2010. Even though the company would didn't exist on 1/1/2010, can I still make the plan effective 1/1/2010? and

[PensionPro]

Follow this trail: http://benefitslink.com/boards/index.php?showtopic=30538