If the service crediting method of a plan is changed from elapsed time

[Guest WBrown]

If the service crediting method of a plan is changed from elapsed time, which includes fractional years, to hours of service, which is whole years only, how are service accruals converted? For example, if a person has 2 years and 8 months, how much service would the person be credited with under the new method?

Would you assume an hours equivalency, for example 190 hours for each month, in determining service for the partial years?

[Guest jdw]

See Regs. 1.410(a)-7(f)(1)(ii).

[Guest WBrown]

Thanks, that's what I needed.

Now I’m trying to interpret the regulation for this case.

Suppose:

Transfer occurs 1/1/2000

Date of Hire: 6/1/1997

Service as of 12/31/2000: 2 years, 7 months

It appears that the person should get credit for:

(1) 2 years, representing the number of one-year periods credited as of the date of transfer

(2) 1330 hours credited for the computation period (1/1/2000 – 12/31/2000) in which the transfer occurs.

If the person continues on full time in 2000, then at the end of the 2000 she will have earned one additional year of service, for a total of 3 years at 12/31/2000.

A literal reading of the regulation seems to say that the 7 months can go by the wayside.

If the transfer date had instead been 12/31/1999, then would the result be:

(1) 2 years as of transfer date

(2) 1330 additional hours for the 1/1/1999 – 12/31/1999 computation period, which would lead to a year of service for that period.

So the person would have 3 years of service (instead of 2) as of transfer date?

[Guest WBrown]

The date in my example above should have read 12/31/1999 as the date of measuring service for the transfer date.