When a new employee is hired, there are two initial questions that must be answered to determine eligibility:
- Does the new employee meet all participation guidelines established by your plan?
(e.g., completed the waiting period? working the required number of hours?)
- Is he/she considered a key or highly compensated employee (by IRS definitions)?
This question is critical in determining if the new participant will affect your non-discrimination percentages. If you have any doubts about this, call ProBenefits to get more information.
Having determined eligibility, follow these steps:
- Submit the completed Plan Participation Form two weeks prior to the participant's effective date, whether the employee is participating or waiving participation. Your next monthly billing will show the newly-hired employee with corresponding election amounts, if any.
- Also, submit the Pre-Tax Premium Notification Form to notify us which plans and premium amounts, if any, are applicable to the new employee.
It is vital to notify us promptly of new employees so we can keep accurate records for discrimination testing and year-end IRS Form 5500 reporting.