SCP amendment for early inclusion otherwise ineligible person

[Cynchbeast]

We have a 401(k) that allowed a person to start deferring before he was eligible, and want to retroactively amend for SCP correction. We are unclear as to the form and substance of the amendment:

1. Does the amendment name the specific individual(s) allowed in in error, or to all persons who would meet the amended eligibility criteria? (ex: change from 1 yrs svc to immediate entry is need to make that person eligible; does this apply to him, or to everyone)

2. Does the amendment apply only for those year(s) when ineligible person(s) deferred or prospectively from that time forward?

3. Using SCP, does this amendment have to be submitted to IRS for determination letter?

[Lou S.]

1. If it is only NHCEs you can typically draft the amendment to to cover only effected individuals but it could be drafted such that it covers all similar employees.

2. Depends how the amendment is drafted.

3. If using SCP, no.

[Cynchbeast]

Thank you for your response. John Doe was hired on 10/27/14 and should have entered plan on 01/01/16, but he started deferring 11/01/14. Based on your response, it sounds as though it would be acceptable for the amendment to allow John Doe (identified by name) to enter the plan on 11/01/14. Is this correct?

Two others were also hired in 2014, and we would therefore not be allowing them in? Nor would anyone else get immediate eligibility?

Here is the kicker: the one person affected was hired at the salary level of an HCE and is currently an HCE but since he only worked 2 months in 2014, he was actually NHCE for 2014 an 2015. Do we have a problem with that?