Service Requirement for Accrual

[ERISAAPPLE]

I have seen more than a few Cash Balance Plans that require either 1,000 hours of service or employment on last day of the plan year to receive an accrual for that year.  I can't think of any plans I have seen that require both 1,000 hours and last day of the PY.  Is that permissible in a CB plan?  Can a CB plan just require last day of PY with no hours requirement?  I am not aware of any rule that says a plan can't do this, but for some reason doubt is creeping in.  

[figure 8]

I don't believe a CB plan (or any DB plan) can require last day employment. You could have elapsed time method for accruals, in which case you need to be employed at the end of the year to get a full accrual, but even then you would earn partial service for each month (or day or whatever's elected) worked throughout the year.

[ERISAAPPLE]

The documents say the participant satisfies the accrual requirement if the participant completes 1,000 hours or is employed on the last day of the plan year.  That effectively imposes a last day of the plan year requirement on participants who are credited with fewer than 1,000 hours.  

[figure 8]

I think the either/or approach is okay, because in that case you are granting something more generous than 1000 hours required. You are saying you have to work 1000 hours - but if you don't, you'll still get an accrual if you're there at the end of the year. That seems okay.

What wouldn't be okay is just saying "you have to be there at the end of the year." Because someone who worked 1000 hours and quit would not be getting a benefit in that case. Which wouldn't be okay, as is my understanding. Unless you take an elapsed time method approach, which still gives partial credit throughout the year.

[ERISAAPPLE]

Is the plan required to give an accrual for employees employed on the last day of the year, even if they don't have 1,000 hours?

[figure 8]

Not in a CB (or any DB) plan.

Unless the document would say so (such as in your "either 1000 hours or employed on last day" example, which, again, is okay since it is more generous than "1000 hours").