When is this participant eligible for the CT PS contribution?

[Pammie57]

Plan is a 401k with CT PS contribution. When plan first started in 2010, elgibility was 6 mos and age 21. Participant A came in during 2010because she worked 6 months/age 21. She has never worked 1000 hours though (been employed since 2010) until 2015....

The PS contribution requires a year of svc and employed on last day. in 2015 since she finally worked over 1000 - is she eligible for 2015 PS or 2016 PS? There is some disagreement amongst our ranks.

Eligibility has now changed to age 21 and 1 yos (since 2012).

Comments..cites...

[Bill Presson]

Once the employee becomes a participant, subsequent changes to the eligibility are irrelevant.

So if the 2015 PS requires a 1000 hours and employment on the last day, just ask if she satisfied that requirement. If so, then she is eligible.

WCP

[Lou S.]

Once the employee becomes a participant, subsequent changes to the eligibility are irrelevant.

So if the 2015 PS requires a 1000 hours and employment on the last day, just ask if she satisfied that requirement. If so, then she is eligible.

WCP

Not 100% true. Eligibility is NOT a protected benefit.

Now MOST of the time employees who enter under the old eligibility are grandfathered when eligibility if made more restrictive for PR purposes but it's not always the case.

So in the OP example IF the participant's eligibility was grandfathered then she would be eligible for PS contribution. On the other hand if she was excluded when the eligibility changed she would have to satisfy the new eligibility to once again become a participant and would not be eligible for a PS contribution.

[Bill Presson]

Once the employee becomes a participant, subsequent changes to the eligibility are irrelevant.

So if the 2015 PS requires a 1000 hours and employment on the last day, just ask if she satisfied that requirement. If so, then she is eligible.

WCP

Not 100% true. Eligibility is NOT a protected benefit.

Now MOST of the time employees who enter under the old eligibility are grandfathered when eligibility if made more restrictive for PR purposes but it's not always the case.

So in the OP example IF the participant's eligibility was grandfathered then she would be eligible for PS contribution. On the other hand if she was excluded when the eligibility changed she would have to satisfy the new eligibility to once again become a participant and would not be eligible for a PS contribution.

That's correct. I wasn't thinking about excluding a division or location, etc.

[Doghouse]

It's not just about excluding a location or division. If eligibility is changed to be less liberal, then participation for individuals who haven't met the new, more stringent eligibility requirements can technically be suspended until they do so. Not the most common approach, but it does happen.

[Tom Poje]

Typical document language is as follows:

Any Eligible Employee shall be eligible to participate hereunder on the date of
such Employee's employment with the Employer. However, any Employee who was a
Participant in the Plan prior to the effective date of this amendment and restatement shall
continue to participate in the Plan.

so if the plan originally had 6 months eligibility and no hours requirement, they would have entered. since they never worked 1000 hours vesting years would be zero. if plan was top heavy they should have received top heavy. since never worked 1000 hours could be treated as otherwise excludable for any testing. assuming best case scenario, person declined to make deferrals when first eligible so no failure there.

[Doghouse]

Again, while that language is typical, it's not required.

[Tom Poje]

agreed, it is possible the new doc requires restablishment