401(k) eligibility date

[Guest Tara Curran]

We have a client who is a temporary staffing agency that sponsors a 401(k) plan requiring six months of employment in which the employee completes over 500 hours of service for eligibility. The employee may not have an assignment for a month or two after his documented hire date. The client begins counting the # of months of employment for eligibility purposes from the date the person receives his first paycheck and not the actual hire date. Is this correct?

[Guest JB2]

Look to the plan doc for definition of eligibility computation. I believe that it will state that it starts when the employee performs services which is date of hire, so check date is incorrect. Also, if an eligibility period is less than 1 year, then there probably would not be an hours requirement.

[2muchstress]

I agree that the document should define eligibility computation. In my experience, it has always been the date that service was first performed. Although, who knows? There may be some caveat that we are not aware of...

In our documents, if eligibility is less than one year, we us an 83.33 hours per month. So the 500 hours during 6 months could be okay.