Should be an easy eligibility question, but not really

[Santo Gold]

We have a 401(k) plan with eligibility of age 21, One year of service (1000 hours). Plan entry is 1/1 and 7/1. Initial eligibility starts from date of hire. This applies to all contributions in the plan.

A participant was hired on 7/2/2012 who was over age 21, still employed, and worked more than 1000 hours easily (is full time). Does she enter the plan on 7/1/13 or 1/1/14?

The eligibility period in the document states: "means a 12 consecutive month period beginning with an Employee's Employment Commencement Date and each anniversary thereof".

Would you say that the employee satisfies the One Year of Service on July 1, 2013 or July 2, 2013? I think the 12 month period ends on July 1, 2013 in which case I would put her in on 7/1/13.

But reading the above document language, the "anniversary date thereof" would (to me) mean the initial eligibility period ends July 2, 2013, which puts her in the plan January 1, 2014. But if this is correct, doesn't that really make the eligibility period one year plus one day? Is that really what is intended?

Thanks

[Lou S.]

I would say 1/1/14 is eligibility.

With semi-annual entry of 1/1, 7/1 everyone hired 7/2 - 1/1 is eligible on 1/1 following year of service and everyone hired 1/2 - 7/1 is eligible 7/1.

[Tom Poje]

if using Relius it depends on how you fill out plan specs Plan Entry Requirements

Waiting Period Exclusive
Would only affect employees hired the day after an entry date. Example: 12 months wait, quarterly entry, 2002 calendar year plan. Employee hired 4/2/01. If the box is checked, employee enters 7/1/02. If not checked, employee would enter 4/1/02.

[jpod]

Does the plan say you get in on the first Entry Date following completion of the one YOS, or the first Entry Date following or coinciding with the completion of one YOS? The answer to that question will answer your question.

[BG5150]

Who wrote the document? Ask them for their interpretation.

[Santo Gold]

JPOD: This plan says first day "coinciding", but I do not think that answers the question. Because it really comes down to when the eligibility is satisfied, July 1 or July 2. If the eligibility period is detemined to end on July 2, then the coinciding date is not until next January 1st.

I will check with the document provider, but I was hoping for something more concrete that is in the document and not just take the document provider at their word.

Thanks to all for your replies.

[BG5150]

I always looked at it like this:

2013 is a year. That year is from 1/1/13 to 12/31/13, not 1/1/13 to 1/1/14.

When someone is hired 7/2/13, I use the same approach. His year is 7/2/13 to 7/1/14.

[jpod]

I agree that the 12-month period ends on the day BEFORE the anniversary of the start date. I don't think there is any question about it and under the law you couldn't write the document any other way. That's why the only issue in my view is whether the document says "following" or "coinciding or following." If as you say it says "coinciding or following" then i don't think there is any question that this individual gets in on 7/1/13.