1000 Hour rule

[Guest awallace]

Can anyone tell me if the eligibility requirement of working 1,000 hours per year is mandated by an IRS law, or a requirement that the employer determines, and lists in an individual SPD?

[Guest Dook]

The Plan Sponsor (employer) determines eligibility requirements for the plan. Federal law mandates defines the most stringent requirements for eligibility to be age 21 and one year of service during which the employee works a minimum of 1,000 hours.

The employer may allow less stringent eligibility requirements, but not any more stringent for participation in the plan, unless they are providing for imediate vesting of employer contributions. In that case they may require up to two years of service to be eligible to receive employer contributions, but not for eligibility to make 401(k) deferrals.