Year of Service

[Guest GRIMY]

Does anyone recall if there is an infromal amount of time the IRS would use to consider an employee as having completed 1000 hours of service - assuming the employer failed to keep track of actual hours. I kind of recall in a seminar I attended the speaker referenced 5 months worked. Just wondering.

[Mike Preston]

You are referring to the DOL hours equivalencies. In the absence of keeping track of actual hours, a plan may credit 190 hours for each month during which an individual works, 45 hours for each week during which an individual works or 10 hours for any day during which an individual works. The document should specify what the method is, though.

[Guest Mike Schwing]

The document does call for actual hours, but for a plan starting on 01-01-2003, if an employee was hired back in 1999 - does the employer have to go back and count actual hours for 1999, 2000, 2001, 2002?

[Mike Preston]

If the plan sponsor doesn't maintain actual hours for its employees it probably should insist that the provision of the plan that calls for using actual hours be replaced with one of the DOL equivalencies. What else would you suggest?

[Belgarath]

Can't the plan also assume 1000 hours for all employees for all years prior to the first plan year? Of course, they may not want to do this as they may have to cover more employees!