Actual Hours and Short Eligibility Period

[justanotheradmin]

I'm sure this has already been addressed on the message boards somewhere, but I can't seem to find it. So please feel free to just post links of where I should look.

Typically if a 401(k) plan wants eligibility to require service of less than 12 months, I offer to set up the document for elapsed time and continuous service, since it tends to simplify administration.

A plan really wants to require a month of service, with a specific hours requirement for eligibility. of course the document always falls back on the IRS 1 YOS standard if the plan's eligibility requirements aren't met.

Lets say its paired with quarterly entry.

What (if any) is the maximum number of hours the plan can require in one month of service? 3 months of service?

i.e. 80 hours in the first month of employment? if that isn't met that they don't enter until they satisfy the standard 1 YOS?

Are there are regs somewhere that address this?

[John Feldt ERPA CPC QPA]

As long as the plan does not hold employees out of the plan (from deferrals) for more than the age 21/1 YOS with semi-annual entry or anniversary nearest entry, then you can generally create an earlier entry requirement to fit whatever the employer thinks suits their workforce.

For example, monthly entry after completing one calendar month of service with 160 hours is okay. Three months with 500 hours of service - okay. You can even say full time employees enter the plan immediately, and all other employees enter the plan once they have met the age 21/1 requirement.