Recognize Service for Eligibility and Vesting

[DP]

Medical Practice A has a calendar year SH 401k plan. Age 21 and 1 YOS. Dual entry dates. The plan recognizes service with Medical Practice X for eligibility and vesting.

On 1/10/07, Jane Doe, a 10 year full-time employee of Practice X, terminated her employment and was hired at Practice A. The doctors at Practice A want to let Jane start participating in the 401k immediately. My position is that she will have to wait until the next entry date of 7/1/07. Am I wrong in my thinking? Or can she start participating immediately upon being hired?

Thanks.

[JanetM]

Since A recognizes service with X then she would be in immediately.

[TLGeer]

If the service at X does not have to be taken into account (i.e., are they related under 414?), the plan can apply the entry date rules if the plan document so provides. Otherwise, the person is a transfer and the coverage needs to start immediately.

Tom Geer

[austin3515]

I think what Tom Geer is getting at is:

-Are we in the "Employee who transfers from a class of ineligible employees to eligible employees" (in which case Janet M's answer will generally prevail--this applies if A and X are a controlled group) or

-is this just plain old eligibility, in which case the entry dates MIGHT apply.

The following assumes that A and X are unrelated.

I actually doubt the Plan Document will be specific regarding application of entry dates. If it is not, I'd say the Administrator needs to make an interpretation and either: document the interpretation, or amend the document to be specific regarding the entry dates. In this scenario, I believe the document would be controlling - I don;t think ERISA specifically mandates one way or the other.

[DP]

A and X are unrelated. Dr. A used to work for Practice X. She was not a shareholder. When she started Practice A several years ago, she took a few of the staff members from Practice X with her. Now several years later, another employee has left Practice X to work for Practice A.