Full time employment to part-time

[thepensionmaven]

It is my understanding that if a participant goes from FT to PT and works more than 500 hours and is employed on the last day of the year, that individual must receive a contribution.

What is the cite for this??

[Lou S.]

You may have a few issues confused.

If a participant goes from FT -> PT they remain a participant.

The participant would be subject to whatever allocation conditions are spelled out in the plan. So if the plan has a 1,000 hours requirement to receive an allocation the participant would generally not be eligible for the allocation.

It is possible that a participant who would not generally be eligible for an allocation may have to receive one if the plan is top-heavy or would fail some nondiscrimination test if the employee does not receive an allocation. This might be triggered by a "fail-safe" in the existing plan document or might require an amendment to the plan in some cases.

[Doghouse]

More specifically, that individual doesn't need to have a contribution allocated, but is not excludable for coverage testing. He or she is treated as eligible but not benefiting.

[Tom Poje]

the cite is buried in the concept -namely, the person did not have a break in svc (e.g. work less than 500)

common misconception that you have to terminate to have a break in svc.

break in svc means you might have to reestablish svc to be eligible because you had a 'break'