Retroactive adoption of pension plan for 2023

[cathyw]

If a new cash balance pension plan is being implemented now effective January 1, 2023, can the plan exclude employees who terminated during 2023 even though they would have satisfied the eligibility requirements as of 1/1/23?  Can there be an exclusion for any employee who wasn't employed on 12/1/23 for example?  Or would that be considered an impermissible service exclusion?

Alternatively, we can provide an accrual for 2023 with a 3 year cliff vesting schedule and exclude all vesting service prior to 1/1/23.  There is an existing 401(k) profit sharing plan that will continue.  Per EOB, if there is a second plan of the employer that doesn't terminate within 5 years before or after the effective date of the new plan, that is not considered a predecessor plan for purposes of excluding vesting service prior to plan establishment.

Any other options?

Thanks.

[truphao]

exclude by employment classification if possible, impose hours to get an accrual, definitaly exclude pre-effective date sevice for vesting.

[CuseFan]

Be careful if such terminated employees cannot be statutorily excluded from testing, it might create compliance headaches for nondiscrimination, gateway in DCP and minimum participation percentages. 

[cathyw]

We already checked about including them in testing, and coverage will be satisfied.  It's a small plan and only 2 employees would be affected.  One of them terminated with less than 500 hours so he's excluded from coverage.  We'll probably bring him in on 1/1/23 but he won't accrue anything in the db plan, and he won't need gateway in the ps plan.  The other employee terminated with more than 1,000 hours.  I'll probably just exclude him by name since I'm uncomfortable using a 12/31/23 employment date requirement.

Thanks for all input.