In most plans, do you have rule of Parity for both Eligibility and vesting?

[Jim Chad]

In most plans, do you have rule of Parity for both Eligibility and vesting?

In the appendix of the Corbel document, I can exclude either or both.

[Tom Poje]

from a practical point of view?

let's say you go with 1 year holdout instead.

person works a few years and quits. then rehired.

he works the 1 year, thereby becoming re-eligible, but now you have to retroactively enter him in the plan to date of rehire.

but when you ran the ADP test last year you didn't include him.

in addition, he can't defer on $ from a year ago.

The IRS has never answered the question on how to handle such people.

in some ways, it is next to impossible to not use rule of parity, at least in a 401k plan.

now suppose the plan is not a 401k, but a profit sharing - but to complicate things, it is cross tested.

same thing is going to happen. suddenly he is eligible going back a year. talk about tossing a monkey wrench into the works.

so just write it into the document: Sorry, if you quit you can not come back to work simply because it will save everyone involved lots of grief.

[Jim Chad]

Thanks, Tom. I'm looking for a place in the appendix to put in that nobody can be rehired....EVER. LOL

[chc93]

Just a note.... we had a money purchase pension plan where the company had a policy that they will never rehire an employee who terminates for whatever reason. Really made life easier with the plan.

[My 2 cents]

"Former employees" are probably not a protected class. Still, if someone left of their own accord and had desirable skills...