Must the first day of a plan year be an entry date?

[BG5150]

Is seem to remember that the first day of a plan year must be an entry date. is that true? Can I get a cite?

My problem is that I have a plan with a PY of 10/1 to 9/30. Entry requirements are 21/1, with entry dates of 10/1 and 4/1.

But for the first year, for whatever reason, they made it a short PY of 1/1 to 9/30. So 1/1 isn't a plan entry date. Or is it? First day of the plan year.

[pmacduff]

I found an old thread from August 2004 that states that the effective date of a Plan must be an entry date by law. the thread cites 410(a) regarding entry dates.

I'm not versed in how to link to the old post, but it was posted under 401(k) plans and started by mk2308.

hope this is helpful.....

[david rigby]

http://benefitslink.com/boards/index.php/topic/25826-short-plan-year-and-entry-dates/

[BG5150]

This is 410(a)4

(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.

But these are minimum standards.

Could you have a calendar year plan with entry dates of 4/1 and 10/1? Probably not, as you would pass the first condition of minimum entry.

[Tom Poje]

I had one plan that had last day of plan year was the entry date.

as I recall, no eligibility. so someone hired during the year and terminated during that year would not enter, but everyone else would and that would certainly pass min participation of 401(a)(4)

[BG5150]

I had one plan that had last day of plan year was the entry date.

as I recall, no eligibility. so someone hired during the year and terminated during that year would not enter, but everyone else would and that would certainly pass min participation of 401(a)(4)

In that particular case, entry on DOH is definitely earlier than BOY. But any longer wait than that, there can be a scenario where BOY could pass, thus violating 410(a)4(A)

[Lou S.]

This is 410(a)4

(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.

But these are minimum standards.

Could you have a calendar year plan with entry dates of 4/1 and 10/1? Probably not, as you would pass the first condition of minimum entry.

I think that fails as well on the first condition.

I believe you can have a single entry date of the first day of the plan year if the eligibility conditions are no more restrictive then Age 20.5 and 0.5 years of service.

And you can also have a last day of the plan year entry such as Tom Poje describes, though I'm not sure that works well in a 401(k) plan, seems more applicable to profit sharing plans.

[BG5150]

New one:

Calendar year plan.  21/1 requirements.  Entry dates 6/30 & 12/31.

 

Allowable?

[My 2 cents]

1 hour ago, BG5150 said:

New one:

Calendar year plan.  21/1 requirements.  Entry dates 6/30 & 12/31.

 

Allowable?

Sure, as long as January 1 is also an entry date...

[Lou S.]

4 hours ago, My 2 cents said:

Sure, as long as January 1 is also an entry date...

As a practical matter wouldn't the only people effected by that be people hired exactly on January 1?

[BG5150]

Another new one:  Plan year 7/1 to 6/30 PS plan only.

no age, 1 YOS (1,000 hrs).  Entry date:  "last day of the month" ... "nearest to the satisfaction of minimum age and service requirements."

[MWeddell]

The latest eligibility / entry date combination is allowed because it is impossible for an employee to become eligible later than required by Code Section 410(a).