May a plan reference the elapsed time regulations?

[Guest tonjer]

I have also posted this on Retirement Plans in General, but just in case..... I have a client that maintains a church plan. The client regularly acquires new organizations and wants to credit eligibility and vesting service for employees which worked at newly acquiried entities prior to the entities' participation in the plan based on the elapsed time method. May the plan simply state something along the lines of the following: "vesting service will be determined in accordance with the “elapsed time method” of calculating service pursuant to Treasury Regulation Section 1.410(a)-7(a)(1)(ii)" or must the plan fully explain the elapsed time method?

[Kirk Maldonado]

Unless the church elected to be subject to ERISA, then those regulations don't apply.

If they do apply, though. All the rules have to be stated in the plan.

On a historical note, I was the author of the final elapsed time regulations many years ago when I was at the IRS. However, I didn't do the drafting; that was done by the DOL, who handled the proposed regulations before that project was transferred to the IRS.

[Guest tonjer]

The plan is a church plan and has not elected to be covered by ERISA. I guess I am a little confused... Even though the plan is not subject to ERISA, it wants to use the elapsed time method for crediting service in certain situations, so must it spell out all the requirements or may it simply state that service will be credited based on the elapsed time method of crediting service? Thank you so much for your assistance!

[Kirk Maldonado]

If it isn't subject to ERISA, it could use any method of crediting service it wants. It could cross-refer to the regs or develop its own methodology.

[Guest tonjer]

THANK YOU!!