Automatic Reparticipation Upon Reemployment?

[Guest Edward McElroy]

A profit sharing/401(k) plan requires eligible employees to complete a year of service before they can participate in the plan.. Two participants either terminated employment or went on leaves of absence. One employee may have incurred a break in service. Are these employees autotically back in plan on their reeployment or do they need to complete another year of service? Plan has no reemployment provision, but break in service rules might apply if break did occur. In that situation, employee would need to complete another year. Any thoughts>

[Dave Baker]

Of course, once an individual has performed the required service, he or she is eligible to participate right away -- though the plan usually has an entry date provision as well, so that the individual climbs on board on the next entry date.

I think that a reemployed individual generally is eligible to be a full-blooded participant on the day he or she returns to work, on the "why not" theory ... he or she already has performed the plan's service requirement, and already has passed the entry date that next followed the date on which the service requirement was first met.

The break in service rules are an exception, because they basically wipe out the prior service meaning that the individual again has to perform the service requirement in order to be eligible to participate. So I think you're on the right track ... is there anything in the terms of the plan that expressly wipes out prior service if a "break in service" has occurred? If not, then the individual oughta be a full-blooded participant as of the date of reemployment.