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Treatment of Otherwise Excludable Employees for Coverage and ADP Testing-Option 1


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Hello Everyone!

I just need to clarify the rule for Option 1 for Otherwise Excludable Employees:

The rule: The earlier of the first day of the next plan year after attaining age 21 and completing one year of service or 6 months after satisfying such requirements.

The question:

Let's say we are working on a 2023 profit share, and an employee was hired on 07/02/2022.

The earlier of:

 1st day of the next plan year after completing one year of service: one year of service = 07/01/2023, next plan year = 01/01/2024

 Or

 6 months after satisfying such requirements: 07/01/2023 + 6 months = 01/01/2024 (or is it 12/31/2023?)

 Question: Is 6 months after 07/01/2023 actually 12/31/2023 or is it 01/01/2024?

Thank you in advance!

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