I have a radiology practice with a Non-Standardized Profit Sharing Plan. Has a 5/31 plan year with a last day rule. One of the doctors left the practice on 7/27/03 for a fellowship and will be gone over a year.

Will she not receive a contribution for 5/31/04 since she will not be an employee on that date? Or are there special rules for fellowships? I've never seen this addressed before.

Does "left the practice" mean "no longer an employee"?

She is not receiving a paycheck from the practice during her fellowship. She will return to the practice after her fellowship is over.

Could be a leave of absence. Probably look what the plan document says about how that would be treated? But don't forget to see if there is a precedent?

P.S. I'm not a lawyer. Plan might need counsel.

Here's what the plan document says:

Leave of Absence. A temporary cessation from active employment with the Employer pursuant to an authorized leave of absence in accordance with the nondiscriminatory policy of the Employer, whether occasioned by illness, military service or any other reason shall not be treated as either a termination of employment or a Break in Service provided that the Employee returns to employment prior to the end of the authorized leave of absence.

So she will be still be an "employee" at the plan year end of 5/31/04. But she won't have worked 1000 hours during the plan year to get a contribution. She's a key employee and the plan does not provide Top Heavy contributions to key employees.

I am not sure what the question is then. Whether she is on an authorized leave of absence or not, she won't get a contribution.