Rehire Eligibility

[Guest Tdavid]

We have an employee that we are trying to verify service credit for the 401(k) for a parent company.

From 1998 - 2006, he worked for a control group of the parent.

Anyone that transferred from that control group to our main company 401(k) did have their vesting and years of service "brought over".

He did not transfer. He terminated from the control group in 2006.

So, he never did transfer, he was terminated from the control group company. Then two years later the parent company hired him in 2007.

The parent company did not have his service on file, since he never transferred, but he was technically an employee of the company since 1998. He was in a separate 401(k) plan that he eventually was paid out from and had its own vesting and service (that would have carried over if he transferred, which he didn't).

Should his time with the control group count for the company? Or should it not, since he didn't transfer?

Thanks

[Guest Offender]

Since employers that are part of a controlled group of business entities are considered to be a single employer for qualified plan purposes, the transfer is immaterial. Any service for any of the controlled-group entities counts as service for that employer.

[JanetM]

And now you may have another error to contend with. While an employee of a member of the control group he was paid out of plan in that same control group. OPPS. You say he worked for one company 1998-2006. Quit, and then was hired by parent company in 2007. If he was paid out while an EE of parent you have a problem.

Yes, his service with any member of the control group counts on vesting and service. Doesn't the employment application ask "have you ever been employed by ABC, LMN or XYZ, if yes when?" That alone could save you.

Based on what you say, the ER is in error.