How does the initial eligibility computation period function when the required service period amounts to two years?

[Guest Enda80]

How does the initial eligibility computation period function when the required service period amounts to two years?

[J Simmons]

I've seen 24 months elapsed method from date of hire used.

More frequently, two eligibility years, which eligibility years defined as 12 consecutive month periods during which the EE has a plan-specified number of hours or more (plan may not specify more than 1,000 hours for this purpose). The first 12 month measuring period ends on the first anniversary of the date of hire. Subsequent 12 month measuring periods may either end on subsequent anniversaries of hire or on the last day of plan years including anniversaries of hire (i.e., the 12 month measuring periods shift to plan years).

Shifting to the plan year can take away much of the advantage that comes with the 2 eligibility year requirement that comes at a cost of not imposing any vesting requirement on ER contributions. It depends on what time in the plan year that the EE is hired. For example, suppose a calendar plan year and Joe is hired December 27, 2008. With the shift-to-the-plan-year, Joe might earn his second eligibility year on December 31, 2009--just a year and 4 days after hired. Joe enters the plan on 1/1/2010.

Now suppose Joe had been hired 5 days later, on January 2, 2009. He could not have his two eligibility years until December 31, 2010, and his entry date would then be 1/1/2011.