Failed Minimum Coverage Test Options

[Coleboy1]

Client has a Safe Harbor Match plan with immediate eligibility. They exclude part-time employees as there are many who work just a few hours a year due to the type of work. ie ushers, etc. Plan has failed the minimum coverage test. How can this be prevented from happening in future years? Any ideas would be appreciated.

 

[C. B. Zeller]

I assume the plan has an eligibility fail-safe that says a part-time employee who actually completes 1000 hours in a year will enter the plan. Otherwise you have an illegal service-based eligibility requirement.

So, all employees who have completed 1000 hours of service would be eligible for the plan. Therefore, you can use the option to disaggregate the otherwise excludable employees, and as long as there are no HCEs who have never completed 1000 hours, it should pass at 100%.

[Coleboy1]

Even though the plan has immediate eligibility with o hours requirement?

[C. B. Zeller]

Yes, that's exactly the kind of design that lends itself to disaggregating otherwise excludable employees.