Corrective Amendment for Ineligibles

[Susan S.]

Brand new SH 401(k), effective date 1/1/14. The person who enrolled the employees did not check eligibility. Deferrals have been withheld for 8 ineligibles, no HCE's. All were hired in 2013 and have not met the 1 year wait. Will follow the EPCRS procedure for amendment. I was originally thinking I would word it so that anyone employed on 1/1/14 is eligible, but since it states that it should change the entry date only for the specific employees, do I include their names in the amendment?

Have not yet submitted document for LOD. Is this amendment going to cause a problem?

[Susan S.]

In addition, they have a short plan year from 1/1/14 - 6/30/14. Does this change anything? When determining a year of service, I assume they still had to be hired on or before 1/1/13 to be eligible on 1/1/14.

[Tom Poje]

if you have other employees hired in 2013 I would be specific by name. (I haven't seen the rule applied to safe harbor plans so I am guessing you can say only include those that deferred befiore their time)

the short plan year makes no difference for eligibility, so with a 1 year wait, then yes normally people hired after 1/1/2013 wouldn't be eligible.

vesting may be an issue, as that is supposed to be a 12 month period so that would be 7/1/12 - 6/30/13 (but not for eligibility)

see Labor Reg 2530-203-2©