Money Purchase Minimum Funding

[Guest ehayes]

I have a money purchase plan with 1,000 hour last day rule that

was frozen in November 2002. Is the plan subject to the minimum

funding requirement in 2002 or is it exempt due to the last day rule?

[jaemmons]

I assume you mean a participant must work 1,000 hours AND be employed on the last day of the plan year. If so, an eligible participant does not accrue a benefit until the last day of the plan year. As such, I would say that the plan does not have a funding liability for the plan year, since no one is accruing a contribution.

If however, you have a 1,000 hours OR employed on the last day requirement, the plan would be subject to minimum funding up through November, since a participant accrues a benefit once they have worked 1000 hours which may be before November.

[jpod]

If you say the plan was "frozen," we have to assume that a timely 204(h) notice was distributed, if the plan is subject to Title I of ERISA. Otherwise, the attempted freeze was ineffective.