Crediting Service

[Young Curmudgeon]

I'm taking over a plan that requires 2,080 hours for a full year of credited service, and gives 1/12th credit for 173 hours if the 2,080 threshhold isn't met.

Is this legal? I thought the maximum hours for credit could only be 1,000.

[quinnfield]

This sound OK to me, as long as they can pass 401(a)(4). You're right that a plan can't require more than 1,000 hours for vesting or eligibility.

[John Feldt ERPA CPC QPA]

As long as they avoid double proration too.

[Andy the Actuary]

1,000 hours is the maximum for vesting. For benefits, can employ higher threshold but recollection is partial credit must be granted if at least 1,000 hours. See DOL reg. 2530.204 for much more detail than you would ever want to know on this subject.

[Effen]

Andy is correct but the partial accruals must be "ratable". Take a look at ERISA Section 204 and 2530.204-2

Your example might need to be tweeked a little.