General test initially fails and the cheapest solution is to do an -11(g) amendment to bring in a new hire who otherwise is not eligible. My opinion question is this: let's say the amendment simply grants employee X as eligible. Who are now the non-excludable people for testing, keeping in mind that when you have two separate eligibility requirements, the lowest rules?

A. Is eligibility immediate and everyone is in the test?

B. Is eligibility whatever minimum would let employee X in and those who were hired before in the test?

C. Does the test just include everyone in the original test and now employee X?

D. Other

What if the amendment were crafted differently and granted a year of service to employee X? Would that change your answer?

On a side note, I am interested in authority on granting an employee a year of service. I have seen this done and have always been bothered by it. Curious about what the Treas. Reg. or IRS guidance is which permits this.

I have always treated it as B.

PBM, that which is not prohibited, is allowable.

Interesting. I would have said C, on the basis that Employee X is now eligible not due to a change in the age or service conditions, but by the magic waiving of the 11-(g) wand.

I would think it would depend on the detail of the amendment, but I am not sure. Does the amendment state that Employee X is eligible for the plan as a whole or does it say the profit sharing component? (Is he already eligible for the plan and not the PS component?) Also, was this guy being brought in from some sort of excluded group? Did the amendment detail his inclusion in such a way he would be the only person brought in to receive an allocation? I know that we had a plan that excluded so many people from the 401(k) portion that it failed the ratio test. The attorney for the plan allowed a contribution to people who terminated under the age of 23. This allowed us to give a big % cont to these people and run the ABT utilizing the accrual rate. We then had enough to pass the test. Don't know if this help, but thought it could not hurt.

The 410(b) test must be run using the least eligibility requirements used for anyone benefiting under the plan, based on this I agree with Mike...its B

The notion of granting a year of service distinguishes the target employee and makes him eligible, but doesn't give him a year of service for real and you can't get to the C answer that way

FWIW, I agree.

Well, I know I'm fighting an uphill battle appealing a Supreme Court decision, but I would continue to argue that the eligibility terms of the plan are (a) anybody who met the original eligibility criteria and (b) anybody named John Doe, assuming the corrective amendment named John Doe as a participant. That would not expand the nonexcludable group except for John Doe because the least restrictive eligibility would be the original people plus John Doe. I don't see how John Doe's hair color, gender, or age/service are relevant if he is not identified by that.

If instead the amendment brought in anybody past age x with y months of service then everybody in that group is non-excludable.

So I'd appeal that it depends upon the wording of the amendment, as buckaroo was exploring. Any chance of an overturn?