NonResident Alien Now Resident Alien - Service and Comp

[Gilmore]

Company A, with 401(k), excludes nonresident aliens.  Employee B, citizen of non-US country with no US Source income, is employee of Company A starting Jan 1, 2018.   401(k) has 3 month wait.

Employee B is moved to US and will begin receiving US source income from Company A 12/1/2018.

In reading other posts, I believe service is counted since Jan 1, 2018, and Employee B would be considered as having satisfied the 3 month eligibility wait.

How about their compensation from Jan 1 to Dec 1?  I've seen posts that all non-US source comp is excluded (say for ADP test, determining next year's HCEs).  I've seen other posts that indicate the compensation non-US source income must be converted to US dollars and used for plan purposes.

Any assistance is appreciated.  Thanks.

[CuseFan]

First, check your document language for when a person goes from an ineligible class to an eligible class (or vice versa). Yes, service from 1/1/2018 counts and by 12/1 eligibility has been satisfied. Assuming under plan terms (s)he enters 12/1, the next step is to look at definition of compensation and whether or not pre-participation comp is included/excluded. If excluded (and plan is not top heavy), use comp from 12/1 for all purposes. If top heavy or pre-participation comp is not excluded, then I think you use full year. I'm not aware of any prohibition on non-US source income.

[Gilmore]

Thank you for the information.

The plan is not top heavy, and does exclude compensation prior to plan entry. 

Looking forward to next year, however, do you know how the nonUS source income is calculated?  The employee was working in France.  Would each payroll paid need to be converted at whatever the conversion rate was for that payroll period?

Thanks again.