Renee H Posted November 5 Posted November 5 I have seen this issue in another post, however, it did not specifically address an owner only 401k plan. The employer is a Sub-S Corp with no other employees. The plan requires 1 year of service, 1000 hours with duel entry dates. Is there an exception for the owner's spouse to enter the plan without satisfying the service requirement? Or should I amend the plan to eliminate the service requirement and then re-amend it back if and when he hires a new employee. He is considering a new hire in the next year or two.
Bri Posted November 6 Posted November 6 Document will specify if non-owners are defined as an entire excluded class. Maybe not the adoption agreement, but the basic plan document. Not unreasonable for a marketed "solo plan" to have such language, under the category of allowing time to address document issues like this before a new hire can get immediately swept in. Belgarath 1
Paul I Posted November 6 Posted November 6 @Bri is correct in pointing to the plan documents - adoption agreement and basic plan document - as a starting point. Conceivably, an amendment that says the spouse is eligible immediately could be simpler approach. This does assume that the spouse has earned income from the company. Be very careful as the employment of a common law employees can become a minefield for owner-only plans (OOPs!) For example: Some pre-approved OOPs documents have provisions that say as on the date there is an eligible common law employee, all contributions to the OOPs stop immediately on that day and the company needs to adopt a traditional plan to provide for any contributions to anyone after that date. If the common law employee becomes eligible to defer as a Long Term Part Time Employee, then the plan will no longer be an OOP. Bri and Belgarath 2
Renee H Posted November 6 Author Posted November 6 The document is not a OOPS document. I use Datair Defined Contribution Pre-Approved Base document #20. I could not find anywhere in the document that makes an exception for owner spouse service requirements. In this case, perhaps an amendment is the way to go. Do you agree?
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