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Showing results for tags 'periods of service'.
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This came up during d-letter review of a DB plan. Plan A requires 1,000 hours of service for a full year of credited service in all years except the participant's first and last years of participation. For those two years, Plan A requires 2,000 hours for a full year of credited service and credits partial years for anything less than that. Anything wrong with having such different rules for the first and last years? 2,000 hours (by itself) is fine as a minimum--the regs say so. § 2530.204-2. I can't find any guidance that says you can't use a different threshold for the first and last years.I don't think this constitutes an impermissible "last day" requirement for the first and last years because the participant need not be employed on any particular day, provided he/she gets 2,000 hours. § 2530.200b-1(b).I don't see a backloading issue--the plan uses a vanilla fixed-percentage-of-comp formula, so unless the "different rules for different years" is itself impermissible, it clearly passes the 133 1/3% test.Nonetheless, IRS is claiming the first and last year's rules are impermissible, simply because in an other plan year a participant with 1,000 hours would get a full year. Any thoughts appreciated.