Entry Date for new plan

[cpc0506]

I have a new plan effective 11/01/2011. Short year is 11/01 to 12/31/2011.

Eligibility is 21 and 1 YOS

Scenario One:

Plan entry dates are defined as: First day of the month coinciding with or next following date requirements met

I believe that the entry date for this new plan can be 11/1/2011 or 12/01/2011 if an employee meets the age and service requirement. Am I right?

Scenario Two:

What if plan entry dates are defined as: First day of Plan Year or first day of 7th month of Plan Year coinciding with or next following date requirements met.

In a newly established plan that is effective 11/01, is the entry date 11/01 since the first day of the plan year in this instance is 11/1/2011 and there is no second date since there is not a seventh month in the short plan year? Or are there no newly eligible because no one was able to enter on 1/1 or 7/1 since the plan was not in existence at that time?

And for 2012, the entry dates are then 1/1 and 7/1.

Scenario Three:

What if the plan was effective March 1, 2011 with short plan year 3/1 to 12/31/2011 and the plan entry dates are defined as: First day of Plan Year or first day of 7th month of Plan Year coinciding with or next following date requirements met.

In a newly established plan that is effective 3/01, is the entry date 3/01 since the first day of the plan year in this instance is 3/1/2011is the first day of the plan year and there is a second date of 9/1 since there is a seventh month in the short plan year?

And for 2012, the entry dates are then 1/1 and 7/1.

There are the issues that cause me rethink why our sales force does not make all new plans effective 1/1 and forget about short plan years. The effective date of the deferral and match feature can always have a different date.

Thanks for your help.

[ETA Consulting LLC]

Let's supose I worked for this company 5 years while they never had a plan. Obviously, I would've already met the age/service/entry date provisions on the first day. Sometimes, the plan may say everyone employed at plan inception is in; while the age/service rules apply to subsequent hires. Even if it didn't, I'm in.

Even if there is a short plan year, say 3/1 to 12/31, I still believe the semi annual entry dates are 1/1 and 7/1. So, anyone who is eligible on 3/1 (the first day of the short plan year), and 7/1, the first day of the 7th month of the plan year is in. This, however, is purely interpretational. The only requirement is that you clearly define your intent in the document and that intent cannot violate 410(a)(1) and 410(a)(4); the age/service and entry date rules.

It's like a puzzle. You would have to draft the plan to make it consistent. There is some flexibility.

I agree with you on the sales force issue. Remember, they're not familiar with all these rules; it's up to you to train them. When you train one, there'll be another newbie coming in that is even more confused than the first. This cycle never ends.

Good Luck!

[Guest Sieve]

In scenario #1, I don't think anyone is in the plan if it is specified that there's a short plan year (a stupid decision by the drafter). You can receive credit for service before a plan is in place, but you cannot meet an entry date until an entry date arises, and there has not yet been a semi annual entry date if one has not passed while the plan was in place. At least, that's my opinion.

[cpc0506]

In scenario #1, I don't think anyone is in the plan if it is specified that there's a short plan year (a stupid decision by the drafter). You can receive credit for service before a plan is in place, but you cannot meet an entry date until an entry date arises, and there has not yet been a semi annual entry date if one has not passed while the plan was in place. At least, that's my opinion.

Do you mean scenario 2? Scenario 1 has monthly entry dates, so 11/1 and 12/1 would be eligible entry dates.