An executive will be out of the office on an 18 month PAID leave of absence

[katieinny]

Under the section entitled Crediting of Hours of Service the 401(k) plan counts each hour for which he is paid due to vacation,......or leave of absence. So, am I right in thinking that there will be no break-in-service and the executive will simply pick up where he left off when he returns to the office. I suppose he can continue to defer into the plan based on his continued pay, but he would not be entitled to a match or profit sharing contribution while he's away, right? I'm getting hung up on the break-in-service definition that says "no Employee shall incur a "break in service" solely by reason of temporary absence from work not exceeding 12 months...." This leave does exceed 12 months. Is it the fact that he's being paid during the leave make the difference?

[masteff]

I'm seeing two separate issues.... service and contributions.

Service: don't over construe the "12 month" line you quoted; the implication is simply 'if it's longer than 12 months then research it further' and not '12 months is magic and instantly becomes a break in service'. Your first sentence says the plan credits service for paid leave of absence so I think that's your answer (by simple definition, you can't have a break when you're getting credited for service).

Contributions: I see this as an issue of compensation and the plan's definition of it. While the pay might qualify for crediting hours of service, it doesn't necessary mean it counts as plan compensation.

As to PS and match, you'll need to read the plan but if the pay counts as plan comp then in a run-of-the-mill plan, I don't see how it would not count for PS and match. But no plan is ever truly run-of-the-mill, so check the plan doc.

[katieinny]

Thanks, Masteff. I couldn't see the forest for the trees for a minute there. I will check the definition of comp. Thanks for pointing me in the right direction.