Retirement status as it relates to a P/S allocation

[Guest Achilles]

Most documents provide that those employees who, during a given year, terminated due to death, retirement or disability will share in an employer allocation, regardless of the allocation requirements.

Death and disability are easy to determine.

Retirement can be as well, as long as the employee stated that they are officially retiring.

But what about those employees that are of retirement age, and just terminate during the year, and go work for another company?

Since they are of retirement age, are they entitled to an allocation? They didn't state that they are "retiring", they're just leaving the company to work for another company.

Also, if a person is of ret. age, and still employed, BUT HAS NOT worked the required number of hours, should he/she receive an allocation?

I would say yes, because you would be penalizing the person for still working for their company.

Thanks in advance!

[chris]

For the most part, the plan document should address all of the issues you mentioned. Regarding the retirement/going to work for another company issue I would think that issue would be resolved by whether or not they meet the plan requirements for retirement, i.e., retirement age, years of service, etc.... If they do, then they are entitled to an allocation if the plan doc. says so. In order for an employee to retire he/she would always have to terminate employment. Therefore, meeting the plan requirements for retirement will control. The fact that the e/ee ends up working somewhere else should not matter.

Regarding e/ee's working past retirement age, I would think they would still need to work the requisite 1000 hours to receive the allocation. The only free pass I know of re getting an allocation without working the requisite number of hours is the the very one you stated at the beginning of your post, which also will be controlled by the plan doc. language.

[Guest Achilles]

Thanks Chris.

I was under the impression that once a person meets retirement requirements, they are entitled to those benefits whether or not they are still employed.

Ex. - plans NRA is 59 1/2. Alloc. req. - 1,000 hrs, last day rule

2 employees, both are age 62, both worked 800 hours in 2003.

Employee A terminated in August, and went to work for Wal-Mart.

Employee B is still employed with the company.

Is it right in this example that employee A would get an allocation and not employee B?

[chris]

It will ultimately depend on the plan document language, but in your example I would think that A would get the allocation and B would not assuming the plan doc. has language as discussed below.

The doc's we use are volume submitter doc's from Sungard Corbel. They allow for you to provide for an alloaction to a participant who has terminated employment b/c he/she has become disabled, retired (early or normal), or died during the plan year REGARDLESS of hours of service. The implication is that if they have not terminated employment because of one of those reasons, then they are subject to the 1000 hrs/last day rule.

The plan language may say that it doesn't matter why an e/ee terminated employment, whether it be retirement, death, disability.... b/c they will still be subject to the 1000hrs/last day allocation req's. Again, plan doc. will control.