Effective date of new plan w/ mid-year deferrals

Any issues with a new plan starting deferrals on June 1 with a plan effective date of 1/1?

Someone here seems to remember someone opining on why NOT to do this, but we cannot figure out why.

Any thoughts?

We typically make plans effective on the first of the year with certain provisions, like deferrals, effective during the year.  Don't know of any reason not to do that.

ditto

Your example is not clear.

When are you ADOPTING the plan?  Are you adopting it mid year?  If so, you ADOPT a plan, say, on June 1 but make it effective January 1 of that year.  You could not possibly defer prior to the plan being adopted.  Deferrals must be elected occur prior to the income being paid.  So, this is a very normal situation and never a problem.

Now, are you suggesting the very weird design of ADOPTING the plan on 1/1/ but not allowing deferrals until 7/1?  Though I have never seen or heard of such a thing, I suppose it is possible so long as, if it's a safe harbor plan, you have the deferrals beginning on a date that meets the initial safe harbor deferral period rules (10/1 for a regular calendar year plan).

Which is your example?

Larry, it's the former.  ER will be adopting the plan this month, with a plan effective date of 1/1/18 but no deferrals allowed until 6/1/18.

I think that's OK too, and I guess the main effect is that for purposes of calculating any match and nonelective, the employer can, if it wants, take into account compensation for the entire plan year (1/1 - 12/31).

OK; while I don't know why they just don't allow deferrals as of the date they adopt the plan (what do they accomplish by not allowing deferrals until 6/1?), I don't see any problem with providing such a provision.

Go with my blessings my son...... :-)

Larry, maybe they don’t have the enrollment materials coordination done yet with their recordkeeper. Or perhaps they want to roll it out after a scheduled company-wide enrollment party. meeting.