Once eligible always eligible "rule"

[Guest JMH1962]

Is there any code reference for this "rule" besides break in service and rule of parity? For example, if a participant is eligible for a plan and later becomes part of excludable class – can the participant be forced to stop deferrals?

Thanks in advance.

[austin3515]

If a participant is part of an excluded class, than by definition they are not eligible to participate in the plan, so yes their deferrals would stop. The fact that they satisfied eligiblity means the plan must be able to pass coverage treating them as not benefitting.

Most plans use the rule of parity. If yours does than to look for a rule other than the rule of parity that talks about recognizing past service is frankly a waste of time. That's the applicable rule.

[Guest JMH1962]

Thanks. That is what I am thinking. One has taken a position that the excludable class provision would only affect certain participants post amendment. Those who were already eligible and deferring would still be permitted to continue deferrals.

P.S. This issue arose in a discussion relating to 410(b) Carve Out Plans.