Recongizing Past Service Discriminatory?

[austin3515]

Doctor A sells his dental practice in 2010. Doctor A buys the assets of another practice in the summer of 2011. There are 3 employees at this other practice, one of whom (believe it or not) worked for Doctor at practice A. Can we recognize service with Doctor A's OldCo when he sets up a plan an NewCo? This will bring the Doctor AND that one older employee from day 1.

My question hopefully demonstrates that I am aware that I need to be wary of discrimination issues. The amendment will benefit 1/3 of the NHCE's, so it does at least benefit a decent percentage. But I did not see what the measure of testing was. Is it BR&F? It seemed to be based on facts and circumstnaces, whiuch for a 3 person plan I might be inclined to advise liberally (with ample CYA).

[QNPG]

Doctor A sells his dental practice in 2010. Doctor A buys the assets of another practice in the summer of 2011. There are 3 employees at this other practice, one of whom (believe it or not) worked for Doctor at practice A. Can we recognize service with Doctor A's OldCo when he sets up a plan an NewCo? This will bring the Doctor AND that one older employee from day 1.

My question hopefully demonstrates that I am aware that I need to be wary of discrimination issues. The amendment will benefit 1/3 of the NHCE's, so it does at least benefit a decent percentage. But I did not see what the measure of testing was. Is it BR&F? It seemed to be based on facts and circumstnaces, whiuch for a 3 person plan I might be inclined to advise liberally (with ample CYA).

Try: Treas. Reg. 1.401(a)(4)-11(d)(2)(iii), then 1.401(a)(4)-4. Hope this helps.

[12AX7]

Why would eligibility become a BRF issue? Isn't that all covered under 410 (a)? This is not an answer to the question, just another question or two.

[Guest Sieve]

QuerkyNerdy -- Your cite is slightly off. You cite to service crediting regs re: h/s & y/s determinations. The proper cite is Treas. Reg. Section 1.401(a)(4)-11(d)(3) [not (2)], which relates to periods of service, specifically starting at -11(d)(3)(i)© & (ii)(A).

12ax7 -- Service crediting methods are, in fact, subject to IRC Section 401(a)(4). Look at Treas. Reg. Section 401(a)(4)-11(a). On the other hand, IRC Section 410(a) relates to minimum eligibility requirements.

[12AX7]

Thanks for the clarification. I was looking at this only as an eligibility issue.

[QNPG]

QuerkyNerdy -- Your cite is slightly off. You cite to service crediting regs re: h/s & y/s determinations. The proper cite is Treas. Reg. Section 1.401(a)(4)-11(d)(3) [not (2)], which relates to periods of service, specifically starting at -11(d)(3)(i)© & (ii)(A).

12ax7 -- Service crediting methods are, in fact, subject to IRC Section 401(a)(4). Look at Treas. Reg. Section 401(a)(4)-11(a). On the other hand, IRC Section 410(a) relates to minimum eligibility requirements.

Sieve, thanks for the clarification. It was "3" and not "2". Hope everyone had a wonderful Easter Holiday.