Mid year entry

[ombskid]

Profit sharing plan with 2 year eligibility. Jan 1 and July 1 entry

DOH 5/1/2013

Eligible 7/1/2015

Terminates 7/25/2015

If employer makes 2015 PS contribution, is employee a contribution?

If so, based on what comp?

Plan is top heavy but that requires end of year employment.

[BG5150]

What is the compnesation basis for the PS in the document? Full year or only while a participant. That will answer your question.

The document knows all.

(or at least most.)

[ombskid]

Compensation is only compensation while eligible

Question is does that apply to service also? If under 500 hours after becoming eligible he can be excluded?

[Tom Poje]

be very careful of document language.
DOH 5/1/13 so ee earns 1 year service from 5/1/13 to 5/1/14
if doc language is such you switch to plan year (as most documents are), ee now earns credit from 1/1/14 - 12/31/14 so has 2 years as of that date and would enter 1/1/15.
Mr. Spock told me that is logically how it works

This is typical document language:

"Eligibility Computation Period" means a 12 consecutive month period beginning with an Employee's Employment Commencement Date and each anniversary thereof. Notwithstanding the foregoing and if the Adoption Agreement provides that the Eligibility Computation Period switches to the Plan Year, his Eligibility Computation Period for such purpose will switch to the Plan Year, beginning with the Plan Year that includes the first anniversary of his Employment Commencement Date. If the Eligibility Computation Period switches to the Plan Year, an Employee who is credited with a Year of Eligibility Service in both the initial Eligibility Computation Period and the first Plan Year which commences prior to the first anniversary of the Employee's initial Eligibility Computation Period will be credited with two Years of Eligibility Service.

[ombskid]

But if doc does not switch to plan year?

[BG5150]

Compensation is only compensation while eligible

Question is does that apply to service also? If under 500 hours after becoming eligible he can be excluded?

Once a person is eligible for and enters the plan, then you look at the requirements to get an allocation. You will use the plan year as the basis. Not just the period eligible for the plan. Then if the person satisfies the conditions to receive an allocation, you look at the formula. So, in your case, it will be based on participation compensation only.

[ombskid]

Thanks