changing from actual hours counting to elapsed time

[Guest anne1]

I have studied the ERISA outline book on this numerous times but still can’t understand it.

I have a client who is switching from counting hours during the plan year to doing elapsed time for vesting. Does anyone have a grasp on how we are supposed to give credit after the switch?

Here is my actual situation:

Plan year is 11/1 – 10/31. Client is making the change on 5/1/06 to amend to use elapsed time.

I realize that each participant will have a different scenario because they all have different hire dates . Do we account for this by just giving all of them an extra year of service at the time of the switch? Also, the ERISA book seems to indicate that we should calculate the elapsed time going forward based on either the 12 month period starting with the date of the switch (5/1) or the beginning of the plan year (11/1) – I’m confused on this point.

Any help you can give on this would be GREATLY appreciated!

[Locust]

Making the change effective in mid-year (5/1/06) could complicate things. It would be fairly easy to do if you make the change effective at the end of the Plan year - 10/31. Then everyone would have vesting service consisting of two parts - through 10/31/06 on the hours of service basis, and 11/1/06 forward on the elapsed time (with employees in service on 11/01/06 having an anniversary date for future elapsed time service of 11/1/06). But if you make the change 5/1/06 you might give everyone service through 4/30/06 on the hour of service basis (and automatically credit them with a year of service for the short plan year ending 4/30/06), and then go forward on the elapsed time basis with current employees having an anniversary date of 5/1/06.

[Kirk Maldonado]

The regulations expressly deal with the issue of switching methods of crediting service.