Predecessor Employer and new employees

[kwalified]

Hello,

A small employer will be hiring 8 employees from a company. Currently, the plan has 1 yos age 21 eligibility conditions. Could they amend the plan to allow for service with these new hires predecessor employer so that they can be in the plan or would that be discriminatory?

[PensionPro]

They can amend the plan to include service with prior employer however the timing of plan amendments must not have the effect of discriminating significantly in favor of HCEs. Treas. Reg. §1.401(a)(4)-1(b)(4). Whether the timing of a plan amendment or series of plan amendments has the effect of discriminating significantly in favor of HCEs or former HCEs is determined at the time the plan amendment first becomes effective for purposes of section 401(a), based on all of the relevant facts and circumstances. Treas. Reg. §1.401(a)(4)–5(a)(2).