Change in employee classification

[Guest Tara Curran]

A client of ours has an employee who became a member of an eligible class of employees during the plan year. The plan document says he is immediately eligible to participate if he meets the age and service requirements, which he does. During the time he was a member of the eligible class he only worked 875 hours, but if you count his prior hours, he would be well over the 1,000 hours. Do his hours prior to him becoming part of the eligible count toward his eligibility for a current year contribution and allocation of forfeitures? Also does his salary before his eligibility count?

[Mike Preston]

It is highly unlikely that you would do anything other than count all hours with the employer when determining who is eligible. However, it _is_ a document issue, so you need to ensure that the document doesn't indicate that only hours while in an eligible class are counted towards the hours requirement.

The same issue applies to counting salary. Here, there is no pattern that I've been able to discern. Some plans count all salary, some don't. Weighing in without looking at the plan document seems futile.

[imchipbrown]

I agree with the hours assertion. Eligible/ineligible classes still have hours of service.

Salary? I've seen prototypes with a choice of either "Plan Year" comp or comp "from Entry Date as a Participant".

Check the doc.