How Is Service For A Leased Employee Counted When The Organization Lea

[Guest GAPPension1]

Hello,

I have a rather interesting situation: I have an

employee who is being leased to Employer C by Leasing Organization A (FYI: Employer C's 401(k)

plan has a 6-month service requirement).

The employee has met, or will very shortly meet, the 6-month service requirement for plan participation. However, Leasing Organization A is in the process of ending their business relationship with Employer C.

Employer C has now established a business relationship (for employee leasing purposes) with Leasing Organization B. As a result, the employee in question must now sign a new contract with Leasing Organization B. The employee is now being told that her prior service with Employer C under Leasing Organization A's contract will be disregarded for 401(k) participation eligibility purposes (i.e., she will have to wait another 6 months before being able to participate in Employer C's plan).

I believe that the change in leasing organizations is not relevant as far as the employee's eligibility to begin active participation in Employer C's 401(k) plan shortly, since she has met the service requirement.

Any helpful feedback on this issue would be greatly appreciated.

[Erik Read]

Does your plan document address "prior service credit"? That's where I would turn, to see if due to the leasing arrangement the employee's prior service with a predecessor is counted.

Aside from that, I'm not sure where you would find an answer specifically for a case like this.

Good Luck.