Use of 1/2 as an entry date to delay 80/120 rule

[Guest GuyHockerIII]

I've read many discussions about 1/1 entry and participant count.

Is there any reason why a plan could not use Jan 2nd (and 7/2 if no other entry dates) as an entry date and thereby perhaps delaying an audit requirement?

[John Feldt ERPA CPC QPA]

I thought the first day of the plan year must also be available as a date of plan entry. If I find the cite, I will post.

[david rigby]

The statute reads,

4) Time of participation

A plan shall be treated as not meeting the requirements of paragraph (1) unless it provides that any employee who has satisfied the minimum age and service requirements specified in such paragraph, and who is otherwise entitled to participate in the plan, commences participation in the plan no later than the earlier of—

(A)the first day of the first plan year beginning after the date on which such employee satisfied such requirements, or

(B)the date 6 months after the date on which he satisfied such requirements,

unless such employee was separated from the service before the date referred to in subparagraph (A) or (B), whichever is applicable.

If your plan uses the minimum (ie, the reference above to "paragraph (1)", then using January 2 would seem to fail 410(a)(4)(A).

[Guest GuyHockerIII]

well, there you go, sorry I didn't do my homework better, and thanks for the help!

[Sully]

Follow up question to this discussion.

Assuming a calendar year plan, if a plan uses an eligibility requirement of something less than the minimum age and service requirements under 410(a)(1) (i.e. age 21 and 1 Year of Service), would they be able to use entry dates of 2/1 and 8/1?

The situation I am contemplating is one in which the eligibility requirement is 6 months of employment (with no set number of hours and no age requirement) and entry dates of 2/1 and 8/1? I tried different hire dates using this criteria and every hire date I used allowed the employee to enter the plan within the time frame required by 410(a)(1) and 410(a)(4).

Can anybody confirm if this would be allowed? Thanks in advance.

[MWeddell]

Yes, that is permitted. As you point out, all eligible employees are covered by the plan no later than the first day of the plan year of six months after they have attained age 21 with 1 year of service.

[Jim Chad]

Doesn't the first day of a plan year have to be an entry date?

[Sully]

Doesn't the first day of a plan year have to be an entry date?

I could find nothing in the regulations that requires it.

[shERPA]

We had a takeover plan that had 2/1 and 8/1 entry dates. When we restated it we submitted it for a DL, and IRS came back requiring an amendment to add the first day of the plan year as an entry date. They cited 410(a)(4) and 1.410(a)-7©(3)(I)(A).