1000 hours requirement waived for disability

[Guest Tammy2006]

I'm having a contradiction with my manager regarding this issue, maybe you can help

Profit sharing plan, 1000 hours requirement to receive PS allocation. One participant became disabled during 2005 and had worked only 600hours. The plan adminsitrator really wants to give this guy a PS by waiving the 1000hours requirement just for the disabled employee. Isn't this discriminatory?? I say yes, my manager says no, the plan adminsitrator can do that if they want to.

Thanks.

[QDROphile]

What does the plan say? The plan terms must be followed.

[Guest Tammy2006]

the plan says you need 1000 hours for allocation. It doesn't say anything about waiving. Can the hours requirement be waived on an exceptional base just in this case?

[david rigby]

The advice from QDROphile is correct. If the plan sponsor wants to do something different, then a properly adopted amendment is the way to accomplish it.

[Belgarath]

It's a very common plan provision to waive the hours requirement in the case of disability, but it isn't always specifically stated that "you don't need 1,000 hours if you are disabled." For example:

A Participant shall be eligible to share in the regular allocation of the Employer contribution for a Plan Year to the Plan and, if applicable, Forfeitures, if he was an Active Participant during the Plan Year and if he satisfies any additional criteria specified in section C of the Adoption Agreement. However, a Participant who retired, died or became totally disabled during the Plan Year meets the requirements to be eligible for a regular allocation if he was an Active Participant in the Plan Year.

So you have to dig a little sometimes. I agree with Qdrophile and Pax - I'd just recommend that you scrutinize the document carefully before a confrontation with your manager. Maybe you can ask the manager to show you the document provision that authorizes the waiver if you can't find it? (Maybe it simply isn't authorized by the document, but hopefully a manager would know something this basic. I think I've just been fortunate to have managers who 'know what they don't know' and don't argue those issues with those who do know.)

Good luck!

[E as in ERISA]

How is the disability paid? The hours definition is not just hours worked, but generally hours for which you are paid regardless of whether worked or not worked. If the disability is paid through regular payroll, it's possible that the hours count. Depends both on how the disability and the plan define define terms and operate. Probably doesn't work. But worth checking to avoid amendment.

[E as in ERISA]

See regulations under ERISA. 2530.200b-2(a)(2) says an hour of service includes an hour for which the employee is paid by the EMPLOYER for a period during which NO duties are performed due to incapacity (including disability). (i) says you don't have to count more than 501 of those hours. (ii) says you don't have to count the hours if paid for by disability insurance. Check your disability program and plan document.

[Tom Poje]

keep in mind, if you are after the end of the plan year, it is a little late to amend, especially if a profit sharing plan. you would end up reducing everyone elses contribution by the amount you are giving to the disabled person. there are anti-cutback laws to keep in mind.