elapsed time method and ADP testing options

[DMcGovern]

Plan uses the elapsed time method for eligibility, with a more liberal requirement than a 1 year period of service. For ADP testing using either disaggregation of otherwise excludables or the early participation rule, do you think it is possible to apply the statutory requirement of one YEAR OF SERVICE and 1/1, 7/1 entry dates? This seems to be in conflict with the document provisions.

[Beth]

I agree with the above statement how it seems to contradict with document provisions, however I would love for support/documentation on this.  I am not able to find specific language on not being able carve out those employees who have never worked 1,000 hours in a plan year when elapsed time is used for eligibility purposes.  My understanding is that you can only disaggregate based on age and period of service when elapsed time is used, meaning hours would not come into play at all.  But again would love support/documentation on this to make sure I am understanding correctly.  

[Paul I]

I suggest starting with your plan document.  The document should contain the ADP testing rules for the plan including disaggregation rules for testing and the determination of otherwise excludable employees for testing.  If you are using a pre-approved document, then this language most likely will be in the associated basic plan document.

The provisions I typically have seen refer to the age 21 and One Year of Service rules in IRC 410(a).  This section references the 12-month eligibility computation period and the 1,000 hours of service rules.

The discussions about using semi-annual entry dates together with the age 21/One Year of Service rule focus on language the IRS has used referring to the "greatest minimum participation requirements".  These discussions do not explicitly address the 1,000 rule, but it seems it would be reasonable that the 1,000 rule is a greater minimum requirement than an elapsed time rule.

This is not legal advice.  Most importantly, follow the document.

[MWeddell]

I hope the original poster wasn't still waiting for a response 14 years later.