Eligibility requirements

[Guest terric]

The eligibility requirements for a non-standardized profit sharing plan are: age 21, 1 year of service

Plan year ends 09/30/05

Dual entry dates 10/1 & 4/1 after meeting the eligibility requirements.

Employee was hired 1/18/00

Works 1000 hours from 1/18/00 - 09/30/00

Terminates 10/1/00

Rehired 02/14/05

Did this person meet the 1 year of service and should they be allowed to enter the plan upon rehire?

[Archimage]

Your plan doc should address this. Usually it will say this person would enter on the date of their rehire.

[JAY21]

I agree with Archimage that's a very common plan doc provision (immediate rentry), but depending on how the plan defines it's 1-year eligibility, the dates in this thread suggest that maybe the employee did not meet the 1-year of service if the plan defines 1-year of service as as completing a full 12-months of employment (with or without the add'l requirement of 1000 hrs). If that's the case I don't see where he/she would "re-enter" immediately upon re-hire given a failure to initially qualify for the plan (about 3-months short). Following my assumption (12 months required) then maybe the question is when does he enter in 2005 ?? (e.g., after 3 months of add'l service or does he need to totally work another full 12 months). Again, it's document specific, I'm sure there are provisions in some plans that allow the earlier service to be disregarded entirely, but don't remember if the regs use the same standard for intial eligibility service as they do for vesting service, where the break-in-service rules generally require you to count all service earned within 5 years before the re-hire date (or the same period as the initial service period if longer). If that same vesting service standard is also required for eligibility service he probably needs to work another 3 months and enter on the next entry date. If it's not the same requirement as vesting service, then your plan doc might tell you to ignore that earlier 9 month service period (given a 4 year break in service) and then there's a reasonable chance he isn't going to be a participant until another 12 months are worked. Check the Doc.

[Guest terric]

The document is not very clear (in my opinion) on the topic. Here is language from the document that pertains to my situation:

Definition of a Year of Service:

"The eligibility computation period starts with the day the Employee first performs an Hour of Service and is a twelve (12) consecutive month period during which the Employee has completed the number of Hours of Service (not to exceed one-thousand (1000) as elected in the Adoption Agreement and

each anniversary thereof."

Under Eligibility Requirements:

"(a) In the event that an Employee has satisfied the eligibility requirements, but is not employed on the applicable Entry Date, such Employee will become a Participant for the purpose(s) for which an Employee

had previous qualified upon his or her rehire."

"(b) Except as otherwise provided in the Adoption Agreement, all Years of Service will be counted for purposes of determining whether an Employee has satisfied the Plan's Service eligibility requirement, if any. If a Participant has a Break in Service or Period of Severance, Service before that Break in Service or Period of Severance shall be reinstated as of the date the Employee is credited with an Hour of Service after incurring such Break in Service or Period of Severance."

I am reading this to mean that as long as the employee worked 1000 hours within a 12 month period, they have met the 1 year of service because they did work 1000 hours within the "eligibility computation period".

[JAY21]

I have to agree that's not as clear of language as you'd like. I could almost read it either way (requires a full 12 mos of employment or does not require it). Any precedent and history established with this plan in similar situations ? If no prior precendent was set you might need to have the employer make the interpretation and note the decision and apply it consistently in the future. At least that way no one will have an "abitrary and capricious argument" against how the eligibility was interpreted and applied. They'd have to convince someone in authority (judge, DOL) that it was just plain mis-interpreted, something probably difficult to do with unclear language. Of course there's no reason to take a hard-line here if the employer doesn't mind being generous.