A Shot in the Dark

A lay off temporary or not meets the definition of a change in status, thus allowing the participant to change his/her election. Presumably the participant would elect to make no further contributions to the FSA. If the employee does not return to work the separation of service cerates cessation of participation. The terminated participant would be able to submit claims for the amount accrued in the FSA account during the appropriate period of time allowed to submit claims. If the employee returns to work that would be a change in status and the employee could elect to change his/her election and begin making contributions to the FSA or not. Again they would be able to submit claims during the appropriate period of time allowed to submit claims.

I would say no, if the participant due to enter on July 1 obtained 1,000 hours. prior to the amendment being completed.

Quick Facts: Employer is an "S" Corp. 100% employee owned via an ESOP. Distributions to terminated Participants are made as soon as administravely feasible following the separation of service using the prior plan year end valuation/appraisal. During the plan year the employer makes a cash deposit to the ESOP. The cash is used to to facilitate the distribution to the terminated participant(s). A few of the higher balanced participants separated service during the last plan year. Employer deposits $1,500,000.00 and issues distributions equaling that amount. Plan year end processing is taking place. Employer Contribution 404 Deductible limit and 404 declared dividend equates to $1,000,000.00. For easy math say, share price is $10.00 per share. So we issued and paid $1,500,000.00 in distributions, but we can allocate only $1,000,000.00. This leaves 50,000 shares unallocated at the end of the plan year. Any thoughts.