Eligibility Rules

[Effen]

Can a plan that is using 1 entry date (1st day of PY) require 1000 hours of service to become a participant? It just feels wrong to me.

It is a prototype - are you surprised?

Entry Date = 1st Day of PY following the date on which the EE meets the eligibility requirements

Year of Participation/Service for eligibility is defined as "Completion of 1,000 hours of service" (note "s", not "S")

Service in the Eligibility Section is defined "The Service requirement shall be 1,000 hours Year(s) of Service (if hours counting method is uses) or Period of Service (if elapsed Time method is used)....If the Hours of Service method is used and the period selected is less than 1 year, an Employee will not be required to complete any specified number of Hours of Service to receive credit for such period." (This doesn't seem to allow an hours requirement to be entered.)

Plan using elapsed time for benefit accrual, 1000 hour rule for vesting.

I think it is a MH prototype, but I can't tell for sure. These provisions just don't seem to fit together.

[AndyH]

It is not uncommon to have one entry date be the entry date nearest completion of one year of service (1,000 hours in a 12 month period) but I don't think what you reference works using "following". Then you'd need two.

[Effen]

That is what I thought as well. It seemed to me that they could a 6 month wait, but not a 1000 hours. Is this something the IRS would pick up on an audit or do you think it is beyond most agents knowledge level?

The plan has some other "issues" and there is a chance these "issues" will trigger an audit.

[AndyH]

My opinion would be that this is very basic, easily noticeable, and would be the type of thing that actually affects employees, so it something that must be quickly fixed.

[SoCalActuary]

You could also fix by using the entry date retroactively to the beginning of the year.

[Guest saeissler]

I wasn't clear from the question whether the service requirement was completion of a 12 month period of service in which 1000 hours was worked or just completion of 1000 hours of service. If completion of the 12 month period is required, I agree with the above comments. However, if you have met the service requirement as soon as you have completed 1000 hours during the period, then I would say 1 entry date works.

[Effen]

What I wrote is exactly the way it is stated. According to the document, the entry date is the fist day of the plan year following 1000 hours of service.

I know a plan that uses dual entry dates can require 1000 hours in an employement year before an employee becomes a participant. I also know that if you use a sigle entry date, you can't require more than 6 months of service. What I didn't know is could you one entry date AND require 1000 hours.

Saeissler, are you saying you think this is ok?

[WDIK]

This doesn't seem to allow an hours requirement to be entered.

Effen, I agree with this assessment you made in your first post. It appears that the adoption agreement was improperly completed. What should have been entered is the number of Years of Service (if the Hours of Service method is elected elsewhere) or Periods of Service (if the elapsed time method is elected).

1000 hours Years of service just makes no sense at all. I don't think there is a legitimate interpretation for such an entry.

[Guest saeissler]

Sorry for the slow response. Looking back at your question, I see that the entry doesn't fit the blank. It looks like the prototype only allows a #years or # months entry - so the 1000 hours entry used would take it out of prototype status.

And, I am wrong anyway - The 1000 hours works with full time people, but if a part time person takes all year to work 1000 hours, depending on the date of hire, the single entry date is more than 6 months after the person meets the service requirement.