DB valuation and mid-year entrants

[Cynchbeast]

We run all our DB valuations as of the beginning of the plan year. Asumming plan year is calendar, with 01/01 and 07/01 entries and 1,000 hrs required for accrual:

Q1 - should a mid-year entrant (07/01) with over 1,000 hours receive an accrual for the year?

Q2 - if not, should that mid-year entrant be included in the testing with 0% benefit?

[My 2 cents]

Q1: What does the plan say? Please understand that benefit accruals are not tied to the actuarial valuation in any way.

Q2: Depending on the plan and on the reasons for the person not entering on 1/1, might the person be considered excludable for testing purposes? If not excludable, the testing would be based on the actual accrual. Again, how the person was handled for the actuarial valuation would not really matter when it comes time to perform coverage/participation/non-discrimination testing.

[david rigby]

Very common for BOY valuations to ignore those who could enter during the middle of the year.