Rehired Rules

[Jilliandiz]

What are the rehired rules if you are already considered a participant.

Eligible participant terminates employment and gets rehired 3 years later, don't they become eligible immediately upon rehire?

What if the document is silent on this issue and there is nothing regarding rehires?

[WDIK]

If the document truly is silent, I guess that you would have to rely on the break in service rules found in the Code and Regulations. You might start in 410(a)(5).

[JanetM]

How have rehires been handled in the past. Has a precedent been set? Now is the most opportune moment to amend the plan to clear up this issue. Like WDIK said - 410(a)(5) is where you need to start.

Will cut and paste for you

410(a)(5) BREAKS IN SERVICE. --

410(a)(5)(A) GENERAL RULE. --Except as otherwise provided in subparagraphs (B), ©, and (D), all years of service with the employer or employers maintaining the plan shall be taken into account in computing the period of service for purposes of paragraph (1).

410(a)(5)(B) EMPLOYEES UNDER 2-YEAR 100 PERCENT VESTING. --In the case of any employee who has any 1-year break in service (as defined in section 411(a)(6)(A)) under a plan to which the service requirements of clause (i) of paragraph (1)(B) apply, if such employee has not satisfied such requirements, service before such break shall not be required to be taken into account.

410(a)(5)© 1-YEAR BREAK IN SERVICE. --In computing an employee's period of service for purposes of paragraph (1) in the case of any participant who has any 1-year break in service (as defined in section 411(a)(6)(A)), service before such break shall not be required to be taken into account under the plan until he has completed a year of service (as defined in paragraph (3)) after his return.

410(a)(5)(D) NONVESTED PARTICIPANTS. --

410(a)(5)(D)(i) IN GENERAL. --For purposes of paragraph (1), in the case of a nonvested participant, years of service with the employer or employers maintaining the plan before any period of consecutive 1-year breaks in service shall not be required to be taken into account in computing the period of service if the number of consecutive 1-year breaks in service within such period equals or exceeds the greater of --

410(a)(5)(D)(i)(I) 5, or

410(a)(5)(D)(i)(II) the aggregate number of years of service before such period.

410(a)(5)(D)(ii) YEARS OF SERVICE NOT TAKEN INTO ACCOUNT. --If any years of service are not required to be taken into account by reason of a period of breaks in service to which clause (i) applies, such years of service shall not be taken into account in applying clause (i) to a subsequent period of breaks in service.

410(a)(5)(D)(iii) NONVESTED PARTICIPANT DEFINED. --For purposes of clause (i), the term "nonvested participant" means a participant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contributions.

[Tom Poje]

also, is the plan a 401k? I vaguely recall the IRS voicing an opinion at one conference you couldn't really operate under a 1 year break in service rule, because, if I remember correctly, the individual retroactively enters to date of rehire, and that botches everything up.