Entry Date

[DTH]

The plan year is calendar, eligibility requirements are age 21 and 1 year of service (1,000 hours) with immediate entry. Subsequent eligibility computation periods revert to plan year.

Participant did not meet the requirements during the 1st eligibility computation period (9/23/14 - 9/22/15), but did meet it during the 2nd period (1/1 - 12/31/15). Is his entry date 12/31/15 or 1/1/16? This has impact on whether he gets the 2015 employer nonelective contribution.

Thank you.

[RatherBeGolfing]

1/1/16. The second computation period ends 12/31/15 and he hasn't met eligibility until it is completed.

[BG5150]

I would posit that it depends on the plan doc language. If it says entry date is next following, or coincident with... then the entry date is 12/31/15. Never mind that. It's immediate entry. So I would say that the person satisfied eligibility on 12/31, therefore enters the plan on 12/31.

What about comp? Is it full-year or participation comp?

[pjbaer]

Our prototype defines compensation either the entire year or just from the plan entry date.

[pjbaer]

My question is related, a plan has nine months of service and then plan entry is monthly. An employee meets the nine months of service on April 1st. Plan entry is then May 1st. Payroll dates are the 1st and 15th of each month. Would the plan use compensation and begin matching based on the payroll date of the 15th since that would then be all of May's compensation? May 1st payroll would be April's compensation and wouldn't be eligible for match?

[Mike Preston]

Unless you have a document that lays out a scenario which is atypical, matching calculations are based on cash basis earnings. If the plan entry date is May 1st then a paycheck issued on May 1st would give rise to deferrals being withheld from the paycheck and the deferrals would give rise to the requisite match.

[ETA Consulting LLC]

1/1/16. The second computation period ends 12/31/15 and he hasn't met eligibility until it is completed.

I agree!

The eligibility computation period ends at midnight on 12/31; or 1/1. 11:59:59 is the last second in the computation period; and you would've presumably worked the 1000 hours a long time before then. After this period ends, at 12:00 midnight, you determine whether or the 1000 was worked and bring the participant in immediately.

I would posit that it depends on the plan doc language. If it says entry date is next following, or coincident with... then the entry date is 12/31/15. Never mind that. It's immediate entry. So I would say that the person satisfied eligibility on 12/31, therefore enters the plan on 12/31.

What about comp? Is it full-year or participation comp?

I agree!

The eligibility computation period ends at midnight on 12/31; or 1/1. 11:59:59 is the last second in the computation period; and you would've presumably worked the 1000 hours a long time before then. If, at this time, you've already worked 1000 hours, then you'd come into the plan immediately at the end of that computation period (but not after).

This is where the language in the plan document saying "The Plan Administrator should have the authority to interpret the plan's provisions when they are unclear." Typically, this will be okay as long as the interpretation is reasonable (or as the IRS would say, is not arbitrary and capricious).

Good Luck!