Year of Participation (YOP) for Section 415

[flosfur]

Generally, the YOP for S415 is the same as the YOP defined for a plan.

Is there a problem with defining a YOP >= 100 hours of credited service in a PY?

What's the minimum hours one can use - is 1 hour ok?

A plan has excess assets which are increasing by leaps and bound by the week, so the plan needs to be terminated ASAP. Termination will take place within less than 2 months into the new plan yr.

All participants have <= 5 YOP and increasing the participation, even by 1 yr, would obviously would be very beneficial. Currently a YOP is >=1000 hrs during a PY.

[Blinky the 3-eyed Fish]

Here is the following from Notice 87-21 Q&A 7:

"For purposes of determining a participant's years of participation for the adjustment required by section 415(b)(5)(A) to the dollar limitation of section 415(b)(1)(A), the participant shall be credited with a year of participation (computed to fractional parts of a year) for each accrual computation period for which the following conditions are met: (1) the participant is credited with at least the number of hours of service, or period of service if the elapsed time method is used for benefit accrual purposes, required under the terms of the plan in order to accrue a benefit for the accrual computation period, and (2) the participant is included as a plan participant under the eligibility provisions of the plan for at least one day of the accrual computation period. If these two conditions are met, the portion of a year of participation credited to the participant shall equal the amount of benefit accrual service credited to the participant for such accrual computation period."

So, if you are able to adjust the YOP requirement under the formula, you certainly count that for a YOP for 415.

Interestingly, my document provider has an option to choose a lesser hour requirement for 415 than for the benefit formula, which is contrary to the above notice.

[AndyH]

I second Blinky's comments as right on. I've looked into this before and this was my conclusion.

But I'd caution to make sure you don't have an issue with discriminatory timing of the amendment, e.g. after other participants have left employment. But it sounds like that is not an issue for you.

[flosfur]

....

But I'd caution to make sure you don't have an issue with discriminatory timing of the amendment, e.g. after other participants have left employment.  But it sounds like that is not an issue for you.

This plan never had NHCEs.

Is there a problem with changing the YOP definition when the plan is being terminated?

[Blinky the 3-eyed Fish]

No.

[flosfur]

Thanks.