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There has to be a bona fide separation however. If there is an agreement the person will be brought back you can't pay them a benefit. The classic example is a person who is terminated with the understanding once they get their benefit paid they will be rehired. This isn't exactly the same but if there is some kind of commitment to bring this person back after a given period of time I have my doubts. If this is a layoff and it is simply if things turn around we will take you back there would be a bona fide separation. I think you need more data regarding this.

Here’s the Treasury’s interpretation: “An employee has a severance from employment when the employee ceases to be an employee of the employer maintaining the plan.” 26 C.F.R. § 1.401(k)-1(d)(2) https://www.ecfr.gov/current/title-26/part-1/section-1.401(k)-1#p-1.401(k)-1(d)(2). As always, Read The Fabulous Document to discern whether the plan’s provision is narrower. Also, if the participant is covered by the employer’s health plan, the retirement plan’s administrator might consider logical consistency with the health plan. Does the health plan treat the worker as still employed and so regularly covered? Or did the health plan’s administrator send a COBRA continuation notice because the worker no longer is employed? This is not advice to anyone.

of course, there is nothing to stop someone from adding additional items to the spreadsheet. the spreadsheet originated in the is way: years ago, when Benefits Link first started, Dave Baker had a spot you could 'articles' or something similar. too long ago for me to remember. I had been curious how the numbers for limits were calculated, the IRS would release them , and by coincidence always at the time of the ASPA Annual Conference. So I researched the issue and wrote an article about how the values were derived. Someone did contact me and said everything was fine, but I didn't indicate the calculation were done to 3 decimal places. Then someone else sent me a spreadsheet he created based on what I wrote up and asked me to see if it made sense. (I think it was Ken Vollmer) Spreadsheet worked great, I modified the spreadsheet to my tastes, and then the following year verified the numbers matched the IRS calculations. After that I would plug in the CPI values and post the 'projected' calculations on Benefits Link, probably as early as June. And then eventually posted the spreadsheet so others could use it. Certainly the spreadsheet was a better contribution than my postings in the humor column or any pension songs I attempted, I'm sure. God bless all, enjoying retirement, helping out at church in many different ways. Taught myself to play the psaltery. peeking in at the web site from time to time.

The statutory exclusion from coverage testing is for a participant who (1) terminated and worked 500 or fewer hours AND (2) did not benefit for such year by reason of such. If benefited - must include regardless. If no allocation conditions - must include regardless. 1.410(b)(6)(f) - these are "and" conditions meaning all must apply to exclude an employee from coverage testing. (f) Certain terminating employees—(1) In general. An employee may be treated as an excludable employee for a plan year with respect to a particular plan if— (i) The employee does not benefit under the plan for the plan year, (ii) The employee is eligible to participate in the plan, (iii) The plan has a minimum period of service requirement or a requirement that an employee be employed on the last day of the plan year (last-day requirement) in order for an employee to accrue a benefit or receive an allocation for the plan year, (iv) The employee fails to accrue a benefit or receive an allocation under the plan solely because of the failure to satisfy the minimum period of service or last-day requirement, (v) The employee terminates employment during the plan year with no more than 500 hours of service, and the employee is not an employee as of the last day of the plan year (for purposes of this paragraph (f)(1)(v), a plan that uses the elapsed time method of determining years of service may use either 91 consecutive calendar days or 3 consecutive calendar months instead of 500 hours of service, provided it uses the same convention for all employees during a plan year), and (vi) If this paragraph (f) is applied with respect to any employee with respect to a plan for a plan year, it is applied with respect to all employees with respect to the plan for the plan year.

Yes, if its a calendar year plan. Isnt this simply saying that you apply the definition of 5% owner in Section 416 to the period defined in 401(a)(9)? It doesn't say anything about a determination date (which is also in Section 416, but in a different section from the 5% owner definition). Instead, apply the 5% owner definition (416(i)(1)(B)(i)) to the period defined in 401(a)(9) (the plan year ending in the calendar year in which the employee attains the applicable age.) 5-percent owner - 416(i)(1)(B)(i) For purposes of this paragraph, the term "5-percent owner" means- (I) if the employer is a corporation, any person who owns (or is considered as owning within the meaning of section 318) more than 5 percent of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation, or (II) if the employer is not a corporation, any person who owns more than 5 percent of the capital or profits interest in the employer. Determination date - 416(g)(4)(C) The term "determination date" means, with respect to any plan year- (i) the last day of the preceding plan year, or (ii) in the case of the first plan year of any plan, the last day of such plan year.