Exclude Ee's working less than 20 hours per week

[austin3515]

Plan document excludes anyone who "does not regularly work 20 hours per week."

Now, in a separate note, "Hours of Service" is defined as 195 hours per month if you work at least 1 hour in that month (or whatever the equivalency is).

I believe that the 20 hours per week exclusion does NOT pull in the Hours of Service definition because it does not use the term Hours of Service.

Has this question ever been addressed? I'm using the Hours of Service definition everywhere that it DOES apply. It does not seem to apply to the 20 hours per week exclusion though.

(actually, I never would have drafted the plan this way - I got a question about this from a friend of mine).

[jpod]

Of course none of us have seen the document(s), but your analysis makes perfect sense to me (especially if "Hours of Service" is capitalized and an explicitly defined term)

[mphs77]

My worry is what is meant by "regularly work 20 hours per week".

A person who works 20 hours per week for half the year then 19 hours per week the other half would accumulate 1,014 hours in the year.....might just throw a monkey wrench in everyone's plans.

[austin3515]

Stay on point please, that's a different question then what I asked I don't disagree with you, that just wasn't the question.

[mphs77]

Stay on point in this forum....you must be kidding......

But really, I agree with jpod that the Hours of Service is not pulled into the

discussion as it is a defined term and the capitalization does matter in this kind

of issue.

[Belgarath]

Austin - does the document by any chance break down the specific purposes for which the equivalency will be used? For example, many documents use the equivalency for, say, vesting or allocations, but not for eligibility, or vice versa. Or it only applies to salaried people, etc...

It seems like SOMEWHERE in the document, it should address this. But if not, then I'd lean toward being forced to use the equivalency for all purposes. Doesn't mean I'm right!

[austin3515]

The document specifically says the equivalency is to be used to determine someone's "Hours of Service." So yes, it is very specific.

It seems to me that based on the way the regulations / law is written, in spite of that method, by law people who work less than 20 hours a week can still be excluded. The regs permit it.

By the way, I should have mentioned, that for purposes of the 410a "safety net" (i.e., 1,000 hours in 12 months) the equivalency of course WOULD apply and clearly EVERYONE will be eligible after the year of service.

[Kevin C]

If the hours equivalency in the document applies to everyone, I don't think the regs support your position.

1.403(b)-5(b)(4)(iii)

(B)

For purposes of paragraph (b)(4)(ii)(E) of this section, an employee normally works fewer than 20 hours per week if and only if—

(1)

For the 12-month period beginning on the date the employee's employment commenced, the employer reasonably expects the employee to work fewer than 1,000 hours of service (as defined in section 410(a)(3)©) in such period; and

(2)

For each plan year ending after the close of the 12-month period beginning on the date the employee's employment commenced (or, if the plan so provides, each subsequent 12-month period), the employee worked fewer than 1,000 hours of service in the preceding 12-month period. (See, however, section 202(a)(1) of the Employee Retirement Income Security Act of 1974 (ERISA) (88 Stat. 829) Public Law 93-406, and regulations under section 410(a) of the Internal Revenue Code applicable with respect to plans that are subject to Title I of ERISA.)

If your plan document says the equivalency only applies to employees for whom hours records are not maintained, you should be ok. That is an option in our VS document.