Retired participant returning to work

[Guest Jill B]

This doesn't seem right. I have a plan that has a participant who officially retired in 2004. Therefore, she was distributed out her account balance. Since then she has come back to work for the company on an "as needed" basis. The only problem is...she is working over 1,000 hours. Would this make her eligible for the plan again?

The document states that, "Upon retirement, a former participant shall cease to be a participant hereunder for all purposes except for receive distributions as set forth above."

It just doesn't seem right that she work for the company after declaring retirement and not have additional benefits....

Does anybody have an idea if there is anything regarding this topic in the Code? I will do some searching...

Thank you!

[rcline46]

Has the person satisfied eligibility? Do they satisfy requirements for a contribution? If they are not part of an excluded class, sounds like a document violation to me if they don't receive benefits.

[david rigby]

Ditto.

[Guest Jill B]

Ditto.

Yes, and Yes.....she is working over 2,000 hrs during the plan year which makes her eligible and eligible for a profit sharing contribution....I will look into this further....

[Belgarath]

Jill, isn't there another section of the document, perhaps dealing with the effect of a "break year" or something along those lines, that addresses the rules for rehires? I find it difficult to imagine that the IRS would approve the document otherwise.

[Guest Jill B]

Jill, isn't there another section of the document, perhaps dealing with the effect of a "break year" or something along those lines, that addresses the rules for rehires? I find it difficult to imagine that the IRS would approve the document otherwise.

Yes, the Break in Service section....but it doesn't address retirees specifically....

"in the event that a participant shall have had a break in service he shall again become a participant as of the first day of reemployment by employer, provided that he subsequently completed at least one thousand hours of service either during the twelve month period commencing with such date of reemployment or during the first plan year commencing after such date. In the case of a participant who incurs a break in service but does not qualify for reparticipation under the preceding sentence or has not terminated employment, such participant shall again become a participant as of the first day the plan year during which eh complete on thousand hours of service after such break in service."

and then,"Cessation of participation after retirement. "Upon retirement, a former participant shall cease to be a participant hereunder for all purposes except for receiving distribution as set forth above."

[david rigby]

Why would you treat this person more "harshly" than a new hire?

[Guest Jill B]

Why would you treat this person more "harshly" than a new hire?

It's very odd....I can't find anything in the code......still looking for something...

[Belgarath]

You are trying to make a distinction for "retirees" that doesn't exist. When the participant terminates employment, whether from retirement or otherwise, and is subsequently re-employed, then he falls under the rules applicable to the "break year"

language you quote.

[Guest Jill B]

You are trying to make a distinction for "retirees" that doesn't exist. When the participant terminates employment, whether from retirement or otherwise, and is subsequently re-employed, then he falls under the rules applicable to the "break year"

language you quote.

Right, so you are saying that the Break in Service rules apply and the section in the document which states that "upon retirement a participant ceases to be a participant" pertains to that point and time....that if the retiree returns and starts working again the break in service rules kick in.....now that makes sense to me!

[Guest Jill B]

You are trying to make a distinction for "retirees" that doesn't exist. When the participant terminates employment, whether from retirement or otherwise, and is subsequently re-employed, then he falls under the rules applicable to the "break year"

language you quote.

Right, so you are saying that the Break in Service rules apply and the section in the document which states that "upon retirement a participant ceases to be a participant" pertains to that point and time....that if the retiree returns and starts working again the break in service rules kick in.....now that makes sense to me!

You know...I'm looking at her hours and her retirement date was Dec 2004 but she never stopped working! She worked 2,000 hrs in 2005, 1,600 in 2006 1,700 in 2007 1,100 in 2008, and 1,400 in 2009!!!

[david rigby]

Uh oh!

Missed allocations?

[Guest Jill B]

Uh oh!

Missed allocations?

Maybe....I know they haven't had a profit sharing contriubtion for the last couple of years...but I need to look farther back....... just marvelous!!!!!

Thanks for all of your input everybody!!!!!

[david rigby]

Even if no ER contributions, don't forget about possible reallocation of forfeitures, depending on plan provisions.

[Guest Jill B]

Even if no ER contributions, don't forget about possible reallocation of forfeitures, depending on plan provisions.

Right! Thanks!

[Guest Spock]

If she never stopped working, was there a distributable event? Does the plan have an in-service withdrawal option?