Jump to content

counting prior service for eligibility


Jakyasar
 Share

Recommended Posts

Hi

Newly established db plan 7/1/2020 to 6/30/2021.

The owner's spouse was an employee in the past and part of a terminated db plan, 10+ years ago. I believe he may have been a part owner back then, no information on that.

He has been working for the company but did not receive any salaries for the past 10 years. Does it matter if working less than 501 hours or even less than 1000 hours?

They want to include him in the new plan and he will start taking salary as of 1/1/2021 i.e. mid year.

Does the plan need a special eligibility amendment or he is assumed to have had employment for eligibility in the past? I believe yes.

As he had nonforfeitable rights in the old db plan, if I understand correctly, rule of parity does not pay a role here??

Thank you

Link to comment
Share on other sites

  • 6 months later...

In general, I shy away from posts which are internally inconsistent. You ask a question in the form of a or b and then you say yes. Very difficult to figure out what to say without going into great detail. Perhaps break it down and ask simpler questions?

Link to comment
Share on other sites

Hi Mike

I hope the following is a more simplified way. I tried to provide as much information about the facts and my thoughts. In my many years, this is the first time I came across a situation like this and a bit puzzled.

Facts:

  •  Newly established db plan 7/1/2020 to 6/30/2021. Same sponsor had a db plan that terminated 10+ years ago.
  • The owner's spouse – John - was an employee and also a participant in the old db plan.
  • I believe the sponsor was owned by John's parents in the past and now owned by John's wife. Never got a clear response on this.
  • John continually works for the sponsor however stopped taking any salaries for the past 10 years.
  • John works between 501-1000+ hours each year for the past 10 years
  • They want to include him in the new plan and he will receive a salary by 6/30/2021

 Questions:

  •  Does the plan need a special eligibility amendment to have him included as of 6/30/2021 i.e. waiving the 1 year wait?
  • As he had nonforfeitable rights in the old db plan does rule of parity play a role here? John was paid out his 100% vested accrued benefit (lump sum form)

 Thank you

 

Link to comment
Share on other sites

1 hour ago, Jakyasar said:

Hi Mike

I hope the following is a more simplified way. I tried to provide as much information about the facts and my thoughts. In my many years, this is the first time I came across a situation like this and a bit puzzled.

Facts:

  •  Newly established db plan 7/1/2020 to 6/30/2021. Same sponsor had a db plan that terminated 10+ years ago.
  • The owner's spouse – John - was an employee and also a participant in the old db plan.
  • I believe the sponsor was owned by John's parents in the past and now owned by John's wife. Never got a clear response on this.
  • John continually works for the sponsor however stopped taking any salaries for the past 10 years.
  • John works between 501-1000+ hours each year for the past 10 years
  • They want to include him in the new plan and he will receive a salary by 6/30/2021

 Questions:

  •  Does the plan need a special eligibility amendment to have him included as of 6/30/2021 i.e. waiving the 1 year wait?
  • As he had nonforfeitable rights in the old db plan does rule of parity play a role here? John was paid out his 100% vested accrued benefit (lump sum form)

 Thank you

 

Sure does sound like he's been an employee all along. Doesn't that answer all of your questions?

Link to comment
Share on other sites

If I may ask one more question - hopefully not exceeding my daily quota.

Changing the scenario, let's assume John did not work for the past 5+ years at all i.e. terminated. Would he still be considered an employee?

Rule of parity rules are a bit confusing for me.

Thank you

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...