New plan with mid-year effective date for deferrals

[cathyw]

If we set up a profit sharing plan with CODA now, make the plan effective 1/1/18 but the 401(k) provisions effective 11/1/18, do we need to include in the ADP test an employee who terminated employment before 11/1/18?

Thanks.

[Mike Preston]

No, but what does the document say?

[Tom Poje]

if it helps...

1.401(k)-2(a)(1)(I)(A)

the ADP test for the eligible HCE....eligible NHCE

and 1.401(k)(6)

eligible employee means an employee who is directly eligible or indirectly eligible to make a deferred election.

so if the person quit before the effective date to defer he is not eligible directly or indirectly to defer.

 

[cathyw]

The document hasn't been drafted yet, I just wanted to make sure in running our projected tests that we could exclude this person from ADP testing but will include for profit sharing general testing. 

Thanks for your responses.

 

[Bri]

If you hurry!!!!!! you can still have it be a safe harbor plan :)

[MarZDoates]

Isn't it correct that as long as the document is adopted by 10/1/2018, the plan can be a safe harbor 401(k) for 2018?

 

Does this mean that the investment company has to have all of the participant accounts set up by October 1?  What happens if the enrollments aren't done / deferrals don't start until mid-October?