Eligibility for rehired participant

[Chippy]

Eligibility for plan is 1 year, age 21 and 1/1 and 7/1 entry dates.

Participant started working on 1/20/2014. She had her one year of service on 1/19/2015. terminated 5/29/2015 before her entry date of 7/1/2015. She was rehired on 12/28/2015. Since the participant met the eligibility requirements before she was terminated, does she enter the plan on her rehire date? Plan is FT. Wm non-standardized. She had 1,000 hours in 2014 and 1,000 hours in 2015.

If she does enter on 12/28/2015, her comp from 12/28/2015 to 12/31/2015 will be considered 2016 comp and is on her 2016 W-2. so she would have zero comp for that period. Plan is safe harbor with a 3% SH non-elective contribution and additional profit sharing contribution. Plan is also top heavy, would she get a top heavy minimum contribution on her wages from 1/1/2015 to 5/29/2015, her date of termination? And no safe harbor for 2015 since she had no comp for the period after her rehire date?

[Tom Poje]

The basic document for an EGTRRA document for Accudraft has the following explanation of how the rules work. without looking not sure how other basic documents describe things, but I generally fall back on this one for an explanation...

(e) Reemployment of an Employee Before a Break In Service and After Eligibility Requirements Are Satisfied. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment prior to the Employee's Entry Date in Section 2.1, the Employee had satisfied the eligibility requirements in Section 2.1 as of the Employee's Termination of Employment, and the Employee is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the Employee will become a Participant as of the later of (A) the date that the Employee would enter the Plan had he or she not Terminated Employment with the Employer, or (B) the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged.

(f) Reemployment of a Participant Before a Break In Service. For any Plan Year in which the eligibility requirements under Section 2.1 are based on Years of Service, if an Employee Terminates Employment after becoming a Participant and is subsequently reemployed by the Employer before incurring a Break in Service, then (1) the reemployed Employee will reenter the Plan as of the Employee's Reemployment Commencement Date, (2) the Employee's pre-termination Year(s) of Service (and Hours of Service during any computation period) will be counted for all purposes, as applicable, and (3) the Vesting Computation Period and/or benefit accrual computation period, as applicable, will remain unchanged.

(g) Reemployment of an Employee After a Break In Service and Before the Entry Date. For any Plan Year in which the eligibility requirements in Section 2.1 are based on Years of Service, if an Employee Terminates Employment with the Employer either prior to or after satisfying the eligibility requirements in Section 2.1 (but before the Employee's Entry Date in Section 2.1) and the Employee is subsequently reemployed by the Employer after incurring a Break in Service, then the Employee's Years of Service that were completed prior to the Break in Service will be recognized, subject to the following provisions:

(1) Determination of Years of Service for Eligibility Using the Rule of Parity. Any Years of Service completed prior to an Employee's Break(s) in Service will not be counted in determining an Employee's eligibility to participate in the Plan if those Year(s) of Service are disregarded pursuant to the Rule of Parity. If such former Employee's Year(s) of Service are disregarded under the Rule of Parity, then (A) the reemployed Employee will be treated as a new Employee for purposes of Section 2.1 and (B) the Employee's Eligibility Computation Period will commence on the Employee's Reemployment Commencement Date and subsequent Eligibility Computation Periods will be based upon the provisions of the definition of Eligibility Computation Period (with the Reemployment Commencement Date substituted for the Employment Commencement Date, if applicable). If the Employee has not satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and such former Employee's Year(s) of Service are not disregarded under the Rule of Parity, then the Eligibility Computation Periods will remain unchanged. If the Employee has satisfied the eligibility requirements in Section 2.1 as of the Employee's Reemployment Commencement Date and such former Employee's Year(s) of Service are not disregarded under the Rule of Parity, the reemployed Employee will enter the Plan as of the Employee's Reemployment Commencement Date.

(2) Determination of Years of Service for Vesting. Any Years of Service completed prior to an Employee's Break(s) in Service will not be counted in determining an Employee's Vesting Interest in the Participant's Account balance if those Year(s) of Service are disregarded pursuant to the Rule of Parity. If such former Employee's Year(s) of Service are not disregarded under the Rule of Parity, then the Vesting Computation Periods will remain unchanged.

[Chippy]

Yes, that is pretty much how the basic document reads. So if she is eligible on her rehire date, which is what I thought, and since she has no comp from her rehire date to 12/31. (all counted as 2016 earnings) Is she entitled to the top heavy minimum for 2015 only? No safe harbor? Just making sure I am thinking correctly. I don't think I have ever come across this situation.

[Lou S.]

Yes I would agree she get a safe harbor of 3% of $0 comp from DOE to PYE and then she needs to get 3% of 415 comp for full year to satisfy TH minimum which can be reduced by the $0 she received as a safe harbor contribution.