Safe Harbor rides again

[pmacduff]

Ok - it's time to beat that dead horse... I have a 401(k) using the safe harbor match. They have no eligibility to defer & participants enter on the first of the month coincident or following hire date. I know I can use my age 21 & year of service exclusion for safe harbor $, but my question is this: Let's say we have an employee hired in 2002 who entered and began deferring at hire (06/01/2002). This same employee NEVER works over 1000 hours, but is age 21. If I use the "year-of-service" exclusion, she will never have a year-of service (YOS defined in this plan as 1000 hours in a plan year). Does that mean I can exclude her indefinately from the safe harbor match? It doesn't seem right to me?!?!? I thought she should get the match for 2003. Thanks in advance! Patti

[R. Butler]

Based on the facts you've given it seems right to me. If Plan requires 1 yr of service and the employee doesn't complete the 1,000 hrs during an eligibility she isn't eligible. (I am assuming Plan uses actual hour method).

[pmacduff]

Thanks R. Butler! Yes, the plan uses the actual hours method.