safe harbor, new plan, eligible but not yet entered?

[Guest francegirl]

filling out paperwork for new plan as we speak. getting tons of conflicting info between broker dealer, provider etc.

plan: 401k safe harbor. one owner, one employee. have reqs. age 21, 1 yr, 1000 hours on plan.

the employee will reach his one year of service in early oct 2011. plan entry dates are jan/july 1. so next possible entry date for him is jan 1 2012.

plan starting now, all docs signed and dated today, will send notice to the employee, so we are within the 90 days.

must he get safe harbor contrib for 2011? some say yes since he's eligible, some say no since he's not yet entered into plan and the entry date matters also.

have googled it extensively but find no reference to entry dates....

[PensionPro]

Depends on the 'paperwork for new plan.' Based on the info you present the employee will enter the plan 1/1/12 and is not eligible in 2011. I am assuming the paperwork does not provide any special entry dates on the plan's effective or adoption dates. Also it would be a good idea to work with someone more familiar with qualified plan rules.

[Guest francegirl]

Depends on the 'paperwork for new plan.' Based on the info you present the employee will enter the plan 1/1/12 and is not eligible in 2011. I am assuming the paperwork does not provide any special entry dates on the plan's effective or adoption dates. Also it would be a good idea to work with someone more familiar with qualified plan rules.

ppwk does NOT provide any special entry dates... talked with several providers and they had different interpretations of this. Owner is of course already eligible since he has satisfied the yrs/hours req.

[Tom Poje]

its probably ok, but I can't tell from the data provided.

it was indicated there were only 2 entry dates 1/1 and 7/1 (probably first day of plan and 6 months following), with no special entry dates. it was not indicated what the effective date was.

it was also indicated it was a new plan, so if it was established 10/1 the entry date for the first year would be 10/1????e.g first day of the plan year.

[K2retire]

If there is no entry date between the signing of the document and the end of the plan year, how does anyone (including the owner) enter the plan in the first year unless there is a special entry date, or the effective date is retroactive to a date before the final entry date of the year?

[Tom Poje]

my point exactly - unless the document says entry date is first day of plan year and 6 months.

[Guest francegirl]

my point exactly - unless the document says entry date is first day of plan year and 6 months.

Plan year is effective 1-1-11, so I guess that's the date the owner is deemed to enter the plan?

Plan Provider says this is ok (ie no safe harbor for anyone else this year since they can't enter till next entry date after they reach eligibility, which is 1/1) and that entry dates (1/1 and 7/1) must be met along with eligibility for safe harbor if I'm reading the document correctly.

[austin3515]

Plan Entry Dates only apply to people who would not have otherwise entered before. So anyone who satisfed eligibility and passed the entry dates in a prior year would be eligible from day 1. To me, it does not seem appropriate to suggest that if you set up a new plan effective 10/1, with semi-annual entry dates, that no one is eligible for the Plan on account of that, if people have (for example) 10 years of service. It just seems incredibly obvious (even if not explicitly stated) that they would be eligible on the effective date of the plan.

[Guest francegirl]

Plan Entry Dates only apply to people who would not have otherwise entered before. So anyone who satisfed eligibility and passed the entry dates in a prior year would be eligible from day 1. To me, it does not seem appropriate to suggest that if you set up a new plan effective 10/1, with semi-annual entry dates, that no one is eligible for the Plan on account of that, if people have (for example) 10 years of service. It just seems incredibly obvious (even if not explicitly stated) that they would be eligible on the effective date of the plan.

There is no one with 10 years of service, except the owner. No one working there meets eligibility except the owner. The one employee has not been there a year yet, and has not yet reached 1000 hours, either.

[austin3515]

I was speaking more general in nature. But in your case, if your document was made effective October 1, 2011 (I know you used 1/1 for an effective), I'm suggesting that the owner comes in on 10/1/11 in spite of the fact that the next entry date is not until 1/1/2012.

I just looked at our Corbel document and there is no special language regarding plan entry dates for newly effective plans. This supports my conclusion, because I think if such language was required to bring the owner in on 10/1/11, Corbel would have added it by now.