Eligibility for Certain Employee

We have a client that is bringing on board a new physician assistant.  Their 401(k) Plan has a one year of service with semi annual entry dates.  They want to amend the Plan to allow this employee to participate immediately.  Any thoughts on amending the Plan and under eligibility naming this individual specifically as being a participant in the Plan?  I am told this employee will be compensated well below the HCE limit (around $90,000 a year maximum compensation).

Thanks in advance.

Since NHCE, should not be an issue. Perhaps some employee relations issues due to special treatment of this person, but I don't see any IRS/DOL concerns.

Is it a safe harbor plan? This doesn't appear to fit squarely in the examples of permissible mid-year changes for safe harbor plans, but it doesn't appear to violate any of the prohibitions either.

rather than amend and allow in by name, maybe consider something like PAs hired between X-Y, or similar. comes across more like satisfying a business need rather than catering to an individual employee. but purely semantics.

In the "old days" when we applied for determination letters on almost every plan, we frequently amended the plan to credit prior service with "x" employer. We often did this even for HCE's, and the IRS NEVER had a problem with it. Not saying they would be the same now, just tossing this out FWIW as another possible option.

Thanks for the responses 

On 7/30/2019 at 1:28 PM, Belgarath said:

amended the plan to credit prior service with "x" employer

Yeah, was going to mention that as possibility as well - good call - but then you have to treat anyone else coming from X in the future the same way, unless you give the amendment limited window period.

Agreed. We never put in a window period.

Might be time to re-think the waiting period.  Consider why the current definition exists and ask whether it makes sense w/r/t/ the characteristics of the workforce.  Consider a shorter period for everyone, such as 30 days.

I wanted to chime in to agree with david rigby.  If it makes sense in this case, might it make sense to change the rule overall?  It's often easier administratively if changes in practice are universal rather than particular.

They could put in vesting if they are concerned about their match.