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SSRRS

Employee excluded from DB Plan and now a participant

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An employee was excluded from a DB Plan for the past three years (backed by plan document). The plan met 410(b) and 401(a) (26) without having to include this employee. For the current year (and forward) the employee will be included. The benefit formula is based on service.  The employee was not excluded based on job classification or union status etc, rather he was excluded by name.

 If the document states that benefits will not accrue for years that an employee was part of an ineligible class, will the employee only accrue a benefit for the current year and not for the prior years of service (or now that the employee is a participant he will accrue benefits for the prior years as well)? Thank you for any insights on this.

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I think your best option is to address this in the amendment that changes the eligibility provisions to bring him into the plan.  Make sure that amendment clearly defines if you want to count his past service, or if you want him to only accrue benefits from his date of entry.  I don't think there is any "rule", but you need to follow the plan provisions.

Is this person an HCE?  If so, I would recommend that you only count future service.  Otherwise you could have some non-discrimination issues.  

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Thank you Effen for your clear and detailed insights. This particular case invloves an NHCE; however, your point about non-discrimination is good to be aware of for other cases. 

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