Controlled Group Service

[Guest CAM223]

I have an employee who worked for a member (Company A) of a controlled group. She terminated employment in May and did not get hired by another member of the controlled group (Company b) until after July 1st (the next entry date). In fact she did not get hired until Oct. 15th. I am not allocating a profit sharing contribution for her for that year since she was not in the plan of Company B until January 1st of the next year. Any comments? Cites?

[E as in ERISA]

If they are treated as a single employer for plan purposes under 414(B) or ©, then her service with Company A counts for purposes of Company B's plan. So you have to look at service from her start date and see if she met the hours and passed an entry date while she was still employed with Company A. If so, then she may enter the plan on her hire date -- October 15. You will then have to determine if she qualifies for an allocation.

[Guest CAM223]

There is authority to allow rehired participants back into a plan on the date of rehire, however I do not have any authority to allow an employee from another member of the controlled group into the plan immediately.

There is a difference between rehired employees and rehired participants.

Any comments along with citations would be greatly appreciated.

[E as in ERISA]

If the companies are in the same controlled group, I would not look at this as a rehire. I would look at this as an employee who changes from a classification that was not eligible for the plan to a classification that is eligible.

[Everett Moreland]

Read Revenue Ruling 80-360