TPApril Posted Thursday at 09:22 AM Posted Thursday at 09:22 AM Company starts business 8/1/26. Two employees: Father and son On 9/1/26 they hire 4 unrelated employees. They want to start a new plan effective 1/1/27 and I'm thinking we can set Immediate Eligibility for anyone employed on 8/1/26 thereby excluding the other employees until 1/1/28 on semi-annual entry dates. This works?
CuseFan Posted Thursday at 05:03 PM Posted Thursday at 05:03 PM Asked Google AI and got this and it seems logical to me in the scheme of things. If early entry is indeed a BRF then I do not think you can do this. If they started the plan prior to 9/1/2026 before they had employees then no issue, but after the fact this clearly discriminates. Benefits, Rights, and Features (BRF) Test (IRC § 401(a)(4)): Permitting early entry is treated as an optional feature or a modification of plan terms. Under 26 CFR § 1.401(a)(4)-4, any benefit, right, or feature must be available to employees on a nondiscriminatory basis. [1, 2] Kenneth M. Prell, CEBS, ERPA Vice President, BPAS Actuarial & Pension Services kprell@bpas.com
ReallyChill Posted yesterday at 05:46 PM Posted yesterday at 05:46 PM 1. If father and/or son are 5%+ owners, how do you pass coverage testing? 2. If semi-annual entry dates and unrelated employees hired 9/1/2026, wouldn't they be eligible on 7/1/2027, not 1/1/2028? 3. If top heavy applies (first year or two, perhaps), they might have to make top heavy contributions for them as well, even if they didn't contribute. And ADP could be tough to pass as well. Just some thoughts - no advice.
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