Which is correct entry date

[dmb]

Calendar Year Plan's service requirement for entry is 1 year of service. Entry date is defined as 1st day of month coincident or next following completion of eligibility requirement. Full time employee is hired on 1/2/13. Would the entry date be 1/1/14 or 2/1/14? Thanks.

[BG5150]

1/1. No doubt. It's coincident with the completion of the 1 year.

[Tom Poje]

same exact question was on the Q and A at ASPPA this year.

IRS response

The service requirement is satisfied on 1/1; "coincident with" means the participant enters 1/1, if "next following" language is used, the participant enters the next entry date (4/1)

[Calavera]

I red about it couple days ago in http://benefitsbryancave.com/what-a-difference-a-day-makes/ where it was emphasized that this answer was unofficial, and does not constitute a formal position of the IRS.

Would you say that 1-year requirement was met on 00:01 of 1/2/14, therefore entering the plan 2/1/14?

[Belgarath]

No. They enter 1/1.

[GMK]

One way to view it is that each year has only one January 2nd.

If you started on 1/2/13, then 1/2/14 starts your second year, which means that the first year ended before 1/2/14. So, the first year of service was completed on 1/1/14. You don't need any portion, not even one picosecond, of 1/2/14 to fulfill a year of service that started on 1/2/13.

Of course, the part about "next following" or "coincident with" does make a difference for the participation date.

[ESOP Guy]

I have seen it both ways and I understand the people who would argue the 1/1 date. As a counter I would point out no one says they turn 40 on the day before their birthday or are married 50 year on the day before their anniversary. So there is a convention that would point to the idea of your 1 year is up on the anniversary day. I think this is one of those areas where the plan administrator can make a judgement call (as all plans allow) and as long as they are consistant will not get called out on it.

[wvbeachgirl]

When I first started in this business many years ago, my boss at the time explained it to me this way: If your date of hire is 1/1/13, when have you completed a Year of Service? Answer: 12/31/13. If the entry date is the 1/1 coinciding with or next following, then your entry date would be 1/1/14. So, when you're dealing with a hire date of 1/2/13, you would complete a Year of Service on 1/1/14, and the entry date coinciding with or next following is 1/1/14 (as GMK said, if your plan document provides "coinciding with"). Looking at it using the actual calendar year beginning and ending dates, and then just adding 1 day to both dates, helped clarify it for me!

[BG5150]

A year of service is a 12-month period. Not 12 months and a day.

Maybe just don't hire people on the first of second of the month...

[GMK]

no one says they turn 40 on the day before their birthday

Social Security does

http://www.ssa.gov/OP_Home/cfr20/404/404-0102.htm

[Tom Poje]

just for clarification, all Q and As will generally carry the caveat 'does not constitute a formal position of the IRS'

that doesn't necessarily validate or invalidate the statement indicated.

If, for instance, the plan was audited and questioned, I would point to the Q and A and say I was making a good faith effort.

I would further add, as a general rule, such questions (unless they are from the floor) are submitted to the IRS personal weeks in advance, so it is not like a spur of the moment answer in most cases.

(this is speaking from experience, as I used to sit on such discussions for a few years)