Re-Hired Employee Question

[Dougsbpc]

Suppose you have the typical medical practice partnership with about 20 employees. The partnership sponsors a 401(k) plan. This medical practice partnership is owned 25% by each of the physicians corporations. The physicians are each 100% shareholders of their corporations. So the 401(k) plan is sponsored by the partnership and each physician corporation adopts the plan as a participating employer. In this case the Participating Employer Adoption page makes it clear that each participating employer will abide by the same plan rules and provisions as the sponsoring employer.

There was an employee of the partnership that terminated employment about 2 years ago and was an eligible participant in the 401(k) plan. She was paid her full distribution last year. Last week, one of the physician corporations hired her on a very part time basis.

Generally, when a former eligible employee like this terminates employment and returns within a few years, they immediately participate in the plan. Since the partnership and corporations are all related employers, I would think she participates in the plan immediately, even though she is re-hired by a different (albeit related) employer.

Anyone disagree with this?

Thanks.

[Bill Presson]

Depends on the document, though she would usually immediately re-enter. So, RTFD.

[Mike Preston]

What Bill said.