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Dentist wife works for his company.  She never worked 1000 hours to reach YOS requirement to be in plan.  They want to let her in so she can max out 401k and get SH Match.  Her hire date was February 2019.  There are quite a few part time employees in the company who have never met the YOS requirement.  Many have hire dates after February 2019.

Do you see an issue doing an open enrollment and stating the plan is waiving the 1 yos requirement for anyone employed on 02/20/2019 so that the wife can get in the plan and then it only lets in a few other part-time people with a hire date before hers?  This way I could limit the number of Part Time employees who become eligible due to an open enrollment.

Also - they sometimes bring back people for a day or two to cover for staff on vacation.  If they brought someone back for a few days who had an original hire date prior to February 2019 but left and only works occassionly - would they be immediately eligible if I did an open enrollment?  Or maybe I could come up with some exclusion for those employees.  

 

 

Posted

There is a rule in the 401(a)(4) regulations that prohibits discriminatory timing of plan amendments. There isn't a mathematical test, it is just a facts-and-circumstances deal. Whatever you end up doing, be careful that it doesn't have the effect of discriminating in favor of HCEs.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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