five year break in service

[Guest nipa]

I have searched the plan document to no avail. A former participant is rehired after incurring a ten year break in service. Is the employee eligible to enter the plan immediately, or must they satisfy the plan's eligibilty requirement? Thanks for your inut!

[JanetM]

If PD is silent, I would fall back on ERISA and apply the BIS rules. This person incurred a BIS and should start over.

[rcline46]

First I would bet it IS in the document. Second (Sorry Janet) how long did they work BEFORE the break, did they take a distribution, what was their vesting on termination?

All of these elements enter into the equation, plus the document MAY also say they have to resatisfy eligibilty and enter retroactively!

[jpod]

I agree that probably there are BIS rules in the document. But if it was an individually-designed document, perhaps not; you only need to include BIS rules if you wish to take advantage of them. Absent any BIS rules in the document, the employee would become eligible immediately upon rehire. Whether or not this was intended by the employer is another story.

[wsp]

First I would bet it IS in the document. Second (Sorry Janet) how long did they work BEFORE the break, did they take a distribution, what was their vesting on termination?

All of these elements enter into the equation, plus the document MAY also say they have to resatisfy eligibilty and enter retroactively!

Wouldnt the vesting and distribution come into play only in determining whether you reinstate the prior vesting percentage and not when they become eligible again? Of course I've been wrong on many of my other assumptions so me being wrong here wouldn't be a shocker either.

Jpod...why immediate? I would think that Janets proposal would be more correct.

[jpod]

WSP, here's an illustration. Assume plan says you become a participant on first entry date following completion of a year of service. Assume employee satisfies those requirements, then later terminates employment. Plan has no BIS rules. 10 years later, employee is rehired. Without BIS rules, employee is immediately a participant. You must follow the plan document to the extent it is consistent with ERISA. It is consistent with ERISA to have no BIS rules. Therefore, the ERISA BIS rules are irrelevant.

[wsp]

WSP, here's an illustration. Assume plan says you become a participant on first entry date following completion of a year of service. Assume employee satisfies those requirements, then later terminates employment. Plan has no BIS rules. 10 years later, employee is rehired. Without BIS rules, employee is immediately a participant. You must follow the plan document to the extent it is consistent with ERISA. It is consistent with ERISA to have no BIS rules. Therefore, the ERISA BIS rules are irrelevant.

wait wait wait....I't consistent with ERISA to have no BIS rules therefore those rules are irrelevant??? That's clear as mud.

Though actually I see the underlying logic. Instant eligibility is always the base. Plan document can allow more stringent eligibility requirements (up to a point). Plan document can also allow for the requirement to RESATISFY those eligibility requirements through the BIS rules. Having those in the document is a choice....so absent the BIS rules we go back to the original eligibility rules. In the case of the rehire...he's satisfied them. Works for me....

Well am I at least correct in assumption that vesting and distribution history isn't material???

[jpod]

wsp: I suppose it was a little muddy; sorry.

What I meant to say is that ERISA does not require a plan to use BIS rules. Therefore, if a plan does not use BIS rules, you cannot "fall back on ERISA and apply the BIS rules" as first Janet and then you suggested.

[Effen]

Is this a DB or DC plan? The implications could be different if it is a DB.