Entry date occurs while employee on medical leave

[Belgarath]

Suppose "normal" plan entry date would occur on July 1. On June 21st, employee goes out on approved maternity leave, or short term disability. Returns to work July 15th. Is the entry date July 1st, or July 15th? Plan doesn't really address this - refers to if the individual is "employed" - so are they "employed" if they are on approved leave? Or are they considered "re-employed" when they return from leave?

My inclination is that they would enter the plan on July 15th.

[ESOP Guy]

My first reaction is the 7/1 date but I don't think I could point to anything in black and white.

Being on leave isn't a form of termination so I think the person is still employed. Just my opinion like I said.

[K2retire]

Was the participant paid between 7-1 and 7-15?

[Belgarath]

Let's assume not.

[K2retire]

If not, what difference does it make?

[Belgarath]

Probably none. I perhaps should have used a better example with a longer period of time - say it is medical or disability, and the person doesn't come back until January 15th of 2015. Then the entry date could become more critical if a profit sharing contribution is made for 2014, for example. So let's go with that. Entry date of 7/1/14 or 1/15/15?

[masteff]

I hate to pull this answer on you but: What does the plan say? You're looking for clue words like "active". We had a plan that mentioned leaves of absence. It may be a matter of back track from defined word to defined word; eg, to be a Participant they first have to be an Employee which requires Employment with the Employer. You might also glance in the break in service section.

I'm inclined to think you could make it be either date, but the mechanism to do that would be the plan document.

[Belgarath]

I understand your answer, but the document does not specifically address this issue. It merely discusses whether they are not "employed" - which gets you back to the answer from ESOP. So I guess it hinges on your interpretation of the term "employed." If they are still "employed" while on disability, then they enter. If they are considered not "employed" then they don't enter.

If this is FMLA leave or something like that, then I would assume they are considered "employed" and would enter.

I suspect in a lot of short term situations, if they aren't getting a paycheck, it would be as K2 observed - what difference does it make?

Thanks for the thoughts.

[My 2 cents]

Many plans would say that if the person is on leave or layoff on the date they would otherwise enter the plan, they would enter on the date on which they return to active service as an eligible employee (if the age/service rules had been met), without having to wait for the next entry date. Is this an ERISA requirement?

[Tom Poje]

the accudraft language (at least from a few years ago) was
(I imagine a leave of absence falls somewhat into this category)

(d) Reemployment of an Employee Before a Break In Service and Before Eligibility Requirements Are Satisfied. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer prior to satisfying the eligibility requirements in Section 2.1 and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted in determining the satisfaction of such eligibility requirements, and for all other purposes, as applicable, and (2) the Eligibility Computation Period, Vesting Computation Period, and/or benefit accrual computation period, as applicable, will remain unchanged.



(e) Reemployment of an Employee Before a Break In Service and After Eligibility Requirements Are Satisfied.

For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment prior to the Employee's Entry Date in Section 2.1, the Employee had satisfied the eligibility requirements in Section 2.1 as of the Employee's Termination of Employment, and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee will become a Participant as of the later of (A) the date that the Employee would enter the Plan had he or she not Terminated Employment with the Employer, or
(B) the Employee's Reemployment Commencement Date,

(2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged.

[Kevin C]

Our document doesn't have any special provisions dealing with eligibility for employees on a leave of absence. It defines an employee as someone employed by the employer. If this came up in one of our plans, I would use a 7/1 entry date. As pointed out, if no compensation is paid while on LOA, it won't affect contributions. It would affect the participant count, but hopefully one more participant doesn't cause it to be a large plan.

[ESOP Guy]

As a rule if the document is silent then all plans have a provision in them that say the Administrator has the authority to reasonably interpret the plan provisions as long as doing so is non-discriminatory and reasonable.

I think either date can have a case is made meets those criteria. But to me LOA doesn't mean terminated so the more natural or dictionary meaning of the word employed says a person on a LOA is employed. As such that points towards the 7/1 date,.

[QDROphile]

I agree with ESOP Guy and a good plan document will not be silent on the subject.