Special Participation Date

Background: We have a brand new cross tested plan. For the 401(k) portion, the eligibility requirements are 21/ 1 YOS (1000 hours). However, the owners would like a special participation date for immediate participation for themselves (no employees in either adopter). This is a plan for two new adopting employers, and the business entities were established in 2019 and 2020 respectively. For one owner, he has been performing services and on payroll since 2019. For the other owner, he started performing services on 1/3 and will be on payroll 10/1 of this year. The document has a specified place for special participation dates, but I wasn't sure what the date should be.

My question is when can this special participation date be? Does it follow with when they started performing services for the business entity or when they started on payroll? In other words, with an owner who has performed services 1/3, but not on payroll until 10/1, what special participation date would I need to use?

Thanks!

There isn't enough information here to really answer your question. The immediate question that comes to mind is: When, if ever, will there be any other employees? If there won't be any, there's no reason for any eligibility requirements at all. 

P.S. - but if you ARE utilizing this provision, due to whatever the facts and circumstances dictate, then I would generally waive the eligibility requirements for anyone employed on 1/3.

My question is not really surrounding future employees, as they do not intend to ever have employees beyond the two owners. I'm more asking about how special participation dates work functionally within a plan. Because it is cross-tested, our actuary sent over his spec's and I just mirrored them on the 401(k), which then necessitates a special participation date. Do you think I could cut all that out and just leave it at immediate eligibility? Thanks for taking the time to reply.

Not certain what cross-testing has to do with it. If there are no NHC, and everyone is in their own "group" then the plan automatically passes nondiscrimination and coverage. No gateway, no coverage testing. Just allocate whatever you want to each HC on an allocations basis, and there is no cross testing necessary. Again, I don't know all your specifics, what your current document says or allows, etc. - I'm just speaking in generalities. When you say an actuary sent you over specs, do you mean that there is also a Defined Benefit Plan involved? If so, you need to ask the actuary.

Anyway, this is general "discussion" based upon almost no information, so it may be of limited use to you. Good luck.

@Belgarath There is a DB plan involved, and I've reached out to the actuary. This is a completely new plan so there is a lot of elements to iron out details on for this (and the yet to be created Cash Balance plan). Thank you for your responses, they helped point me in a good direction!!