<woessner[at]gmail.com> wrote in message
news:1142365720.119974.158730[at]j52g2000cwj.googlegroups.com...
- quote -

Three years vesting is legal, but three years before eligibility (which is
what I think you asked about) is not.
http://www.401khelpcenter.com/pdf/re...comparison.pdf
(See p.2, "employee eligibility", under "profit sharing" column.)

- quote -

No. There are safe harbors to avoid compliance testing, but these require
company contributions (along with other restrictions).
http://www.401khelpcenter.com/cw/cw_...or_401(k).html

--
Mark Freeland
nNeEwTs[at]sonic.net

- quote -

Our company is a little weird in this respect. We just hired a bunch
of new guys. So about half the company has been around for a while and
the other half is relatively new (less than 1 year of service). Among
the old-timers, turnover is pretty much unheard of. Only time will
tell with the new guys.

- quote -

That's not really a major concern for us. The major concerns are
making the plan simple and maintaining continuity with the previous
plan. Speaking of which, I now realize that I forgot to mention WHY
the boss wants this 3-year period. There's a SEP-IRA plan in place
right now where you start getting contributions after 3 years of
service.

I've come up with another question, the answer to which might solve all
of our problems. If the company makes no contributions at all, are we
exempt from all the compliance testing? I think that would be ideal.

Thanks,
Bill

My suggestion would be to look at your competitors plans.

If the industry norm is 1 year, that could enough to make leaving a little
more attractive.

If you are member of a trade group, this won't be hard to find out.

<woessner[at]gmail.com> wrote in message
news:1142008326.831995.162110[at]v46g2000cwv.googlegroups.com...
- quote -

On average, how long has the typical employee been with the company?
How much employee turnover do you have?

A 3 year vesting period, while perfectly legal, sounds a little long
for highly compensated technical employees, especially with
unemployment being fairly low right now.

John Cowart

I'm not sure if this is the right place to be posting, but here goes...

I've been tasked to investingate setting up a 401k plan at my office.
After a few lunch meetings, I'm pretty sure what we want, but I have
one lingering question. The owner would like to make profit sharing
contributions but only after 3 years of service. Is this possible or
would it likely fail the compliance tests?

As an alternative, I told him we could set it up so that an employee
would only be vested in the profit sharing contribution after 3 years,
but he said he would prefer not to make the contributions at all.

Background: We're a small research company with about 20 employees.
About half of our employees are highly-compensated. We have only 2
non-technical employees so the boss would like to keep this simple.

Thanks in advance for any advice and suggestions.

--Bill