Terminated Employee?

[Archimage]

Here is an interesting situation:

A participant terminates full time employment. The employer maintains a standardized prototype. The terminated participant recently entered an arrangement where she works only when needed, such as when someone else is sick. She never works over 500 hours. the plan states that a re-hire can re-enter the plan at the next entry date. Given the sporadic and seldom work of this person, would you consider this person a particpant in the plan at the end of the year? I can see arguments from both sides. I am more inclined to let the employer make the determination for this person.

[QDROphile]

Someone has to decide if the original termination was a bona fide termination. The IRS has issued some guidance that might call that into question. Without a bona fide termination, you don't get to re-entry questions.

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Where can I find that guidance?

[Earl]

I would review that document provision. Are you sure that is what it says?

My initial reaction is that the person is in the plan. There may be accrual issues, but for ADP they are in.

If you want to keep her out, give her an employment classification and exclude that class from participation. One person shouldn't create any coverage issues.

[Archimage]

This a profit sharing only so there is no ADP. This is a standardized doc so you cannot exclude groups. My initial thought is the participant is in the plan as well.

[QDROphile]

See PLR 8440085

[Archimage]

I am having trouble locating this one. What year?

[Archimage]

Nevermind, found it.