New Company Eligibility PS Grant

[cheersmate]

New company estblished Feb 2018, wants to establish SH401k effective Jan 2019. Asset purchase of previous employer, no prev employer plan. Wants eligibility to be 12 mos/1000 hours, dual entry dates.

There are numerous parttime staff.

There are 2 or 3 who work at least 1000 hrs / year, will refer to them as fulltime.

In order to make owner and other 1 or 2 fulltime employees eligible as of 1/1/2019, need to create a nondiscriminatory waiver for eligibility that won't cause parttimers to also be eligible.

Can a plan provide an open elig provision as of 1/1/2019 that is for employees who are credited with at least 1000 hours in the previous year irrespective of 12 months requirement? In other words even though they may have less than 12 mos of service, if they had at least 1000 hrs credited, they are eligible 1/1/2019.  My concern is whether the 1000 requirement in less than 12 mos could be deemed discriminatory.

Thank you

[C. B. Zeller]

You can make 1/1/19 an entry date for employees who completed 1,000 hours during the prior 12 month period, regardless of the fact that the company was not in existence for the entire 12 month period. You could also let all employees who were employed on 1/1/19 enter on 1/1/19 who are reasonably expected to complete 1,000 hours of service during a 12 month period.

[cheersmate]

2 hours ago, C. B. Zeller said:

You could also let all employees who were employed on 1/1/19 enter on 1/1/19 who are reasonably expected to complete 1,000 hours of service during a 12 month period.

Meaning if they were working or anticipated to work at least 20 hr/wk, they could also be made elig? That wb helpful as it would bring in the younger staff who would help w crosstested PS component. 

Do the above as exception to otherwise stated 12mos/1000 hrs dual entry correct?

Thank you

[BG5150]

You can just wait until 2020 and do an 11-g amendment to give allocations to whomever you want to make the tests pass.

[Kevin C]

Wouldn't it be easier to just grant service credit for eligibility for service in January and February 2018 with the previous employer for those included in the asset purchase and then apply the regular 12 month / 1,000 hour with dual entry? 

 

[cheersmate]

3 hours ago, Kevin C said:

Wouldn't it be easier to just grant service credit for eligibility for service in January and February 2018 with the previous employer for those included in the asset purchase and then apply the regular 12 month / 1,000 hour with dual entry? 

 

Hello Kevin - this is exactly what I first attempted to do, however, no records.

[Kevin C]

Would the part-timers still be under 1,000 hours for 2018 if you use an equivalency method for Jan and Feb and actual hours for the rest of the year?