Employee rehired as part time

[Guest coconut695]

Dental office has a full time dental assistant that enters SH 401k plan in 2006. She terminated employment in early 2009 to go to school to become a dental hygenist. Is returning to work for client again in Janury 2013 but only part time (all of their hygenists are part time - only a few hours a week). The plan has 1 YOS, dual entry for eligbility.

Client would like to keep her out of the plan and I am trying to figure out if this can be done. Right now, there is immediate entry upon rehire in document. I know it is not advisable to add a BIS rule to 401k plans to make rehired participants complete a YOS upon rehire, but maybe it would work in this case?

I also thought of excluding hygenists from the plan, but I believe that would solve one problem and create another as I think I would still have to include her for testing...correct? (This is a small plan and I wouldn't pass coverage testing - only 1 other nhce)

Thoughts? Any other options I'm not thinking of?

Thanks in advance.

BTW, please don't respond with "do a search - there are other posts on this". I read posts for 2 hours yeasterday and couldn't find what I need.

[ETA Consulting LLC]

Dental office has a full time dental assistant that enters SH 401k plan in 2006. She terminated employment in early 2009 to go to school to become a dental hygenist. Is returning to work for client again in Janury 2013 but only part time (all of their hygenists are part time - only a few hours a week). The plan has 1 YOS, dual entry for eligbility.

Client would like to keep her out of the plan and I am trying to figure out if this can be done. Right now, there is immediate entry upon rehire in document. I know it is not advisable to add a BIS rule to 401k plans to make rehired participants complete a YOS upon rehire, but maybe it would work in this case?

Maybe not, she wasn't gone for five consecutive breaks.

I also thought of excluding hygenists from the plan, but I believe that would solve one problem and create another as I think I would still have to include her for testing...correct? (This is a small plan and I wouldn't pass coverage testing - only 1 other nhce)

Correct.

Thoughts? Any other options I'm not thinking of?

Thanks in advance.

No. I wouldn't put too much time in trying to find a way to exclude a PT employee. Instead, look at the bright side; her compensation is only 1/2 what it would otherwise have been; so you're only providing 1/2 the contribution.

BTW, please don't respond with "do a search - there are other posts on this". I read posts for 2 hours yeasterday and couldn't find what I need.

We're not that bad.

[Guest coconut695]

Thanks for the laugh, ERISA.

Regarding the BIS....I wasn't aware that the participant has to have 5 BIS to require them to complete a YOS upon rehire. Please clarify?

[ETA Consulting LLC]

Thanks for the laugh, ERISA.

Regarding the BIS....I wasn't aware that the participant has to have 5 BIS to require them to complete a YOS upon rehire. Please clarify?

The five years was the rule of parity for zero vested participants. The YOS upon rehire isn't allowed for the 401(k) deferral feature.

Good Luck!

[Guest coconut695]

The YOS upon rehire isn't allowed for the 401(k) deferral feature.

Isn't allowed or isn't advisable? I know it would not work for rehired full time employees because you cannot defer retroactively (what is she made it a point not to rehire anyone full-time?), but I am only looking to permanently keep out part-time rehires.

[BG5150]

Whether you keep out p/t rehires or "hygienists," you'd still have a coverage problem, no?

[BG5150]

These are the break in service rules for rehires:

One year BIS (“hold-out”) rule: once EE incurs a

one year BIS, plan can disregard EE’s prior service

unless and until EE completes a YOS measured by

reference to re-employment date; then retroactively

count prior service.

Parity BIS rule: if EE (1) is plan participant; (2) is 0%

vested; (3) incurs 5 consecutive BIS, plan

permanently may disregard EE’s prior service.

[Guest coconut695]

Whether you keep out p/t rehires or "hygienists," you'd still have a coverage problem, no?

No I don't think I would. If I can change the document to add a requirement of 1 YOS upon rehire, she would not be included in coverage because she would not be eligible for the plan.

These are the break in service rules for rehires:

One year BIS (“hold-out”) rule: once EE incurs a

one year BIS, plan can disregard EE’s prior service

unless and until EE completes a YOS measured by

reference to re-employment date; then retroactively

count prior service.

Parity BIS rule: if EE (1) is plan participant; (2) is 0%

vested; (3) incurs 5 consecutive BIS, plan

permanently may disregard EE’s prior service.

I know the rule of parity does not apply because I don't have 5 consec BIS. I am looking to change the current document from immediate entry upon rehire to a one year holdout. Just looking to find out if that's possible, knowing that it can be tricky in a 401k plan.