Change to Ineligible Class

[rlb64]

Plan excludes union employees. A participant has recently changed to union. The Plan provides matching contributions on a per payroll basis and a year-end profit sharing allocation with an employed on last day of Plan Year, 1000 hours condition. Plan year ends 6/30.

With respect to the non-union plan, I realize the person immediately becomes ineligible upon change to union and the plan must stop deferrals and discontinue matching contributions. However, I'm not sure whether the participant will be eligible for the 6/30/05 year-end profit sharing allocation and if so, what the compensation figure is.

The document (Corbel doc) says compensation is counted as of date person becomes ineligible. Hours of service definition counts all service. And, this person would be considered employed on the last day regardless of whether a member of the eligible class.

[WDIK]

I think I am either misunderstanding part of your post or the questions being posed. If I am reading correctly, you seem to be saying that the Corbel document has three provisions pertinent to your question.

1) "[C]ompensation is counted as of date person becomes ineligible."

2) "Hours of service definition counts all service."

3) "[A participant that moves from an eligible to an ineligible class] would be considered employed on the last day regardless of whether a member of the eligible class."

In that case it appears the document stipulates that the participant is entitled to a contribution based on salary up to the date of status change.

If that is not the case, please point out how I have misread the post.

[rlb64]

I think the primary question is since there is last day of plan year condition, has this person lost his right to the allocation since he is no longer an eligible participant at the end of the plan year?

[QDROphile]

What is the last sentence in your first post? You said the plan treats anyone employed as employed. That is a conventional plan design, conscious of the possibility that the person might not be in an eligible position. It is parallel to the legal requirement for vesting -- employment in an inelgible position is still counted as service If the plan intended to exclude, it should have said so. Generally, uncertain terms are interpreted in favor of the participant.

[david rigby]

Yeah, ... and to paraphrase QDROphile, "do the plan provisions already answer your question?"