YOS for vesting when employee terminates before the end of the computa

[Richard Anderson]

On a calendar year plan a participant terminates with over a 1000 hours before the end of the plan year. The computational 12 month period for a year of service for vesting is the plan year. Does the participant receive another YOS for vesting? Somewhere I think I remember reading that the determination of Years of Service for vesting is made at the end of the computational period. What does that mean? If someone terminates before the end of the computational period, but with over 1000 hours, do they get another YOS or not?

The Pension Answer Book states that the 7th Circuit Court (Coleman v Interco) ruled that an employee would not receive credit for a YOS even though the employee worked over a 1000 hours because the employee terminated employment before the end of the 12 month period.

Our software gives everyone with at least 1000 hours another YOS for vesting, without regard to when they terminated, and that is how we have always administered plans.

Is anyone not crediting employees who terminate with at least 1000 hours with another year of service for vesting?

[AndyH]

You should look at DOL reg 2530.200b-1. While I did not go through it thoroughly, it appears to specifically state that a year of vesting service must be credited regardless of whether the person is employed at the end of the computation period.

[Guest PAUL DUGAN]

I agree with ANDYH unless the Plan uses elapse time for vesting service. I know from experience. Under the old 5-15 year vesting I had 14 years, 11 months and 15 days on full time service and was not 100% vested. As a pension actuary I thought I knew pension law but that day I learned a $5000 lesson - read THE Plan and SPD.

[richard]

I agree with Paul and Andy. If an employee works at least 1,000 hours in (generally) a plan year, he/she gets a year of vesting service even if he terminates employment during the year. In other words, there is no "last day rule" here.

The way I think of it is if the employee works at least 1,000 hours in "the required 12-month period," he gets a year of vesting sevice. Here, the "12-month period" extends beyond the employee's termination date, with the actual number of hours worked (or equivalencies, if used) being credited before termination date, and zero hours being credited after termination date.

[Guest]

Paul wins the prize. The cite from the Pension answer book says

'...ee did not receive credit for a year of service...even though he was credited with 1000 hours of service for the 12 month period UNDER THE ELAPSED TIME METHOD ...because the employee terminated employment before the end of the 12 month period..'

emphasis mine.

[david rigby]

ditto. The point is that a YOVS could be defined in more than one way, so check the document to find out.