Pro-rated service requirement short plan year.

[R. Butler]

Plan has short year plan year.  YOS for eligibility  is 1 year using 1000 hours of service.   Document  provides in a short year that both the 1 year and hours are pro-rated (the statutory standards are still maintained as an alternative. )

My question is whether the pro-rated hours must be worked during the pro-rated months or just during the short year?  Document  doesn't  really specify.  My thinking is that the hours would have to be worked during the pro-rated period, but hoping for verification.

 

Thanks for any guidance. 

[CuseFan]

The eligibility computation period is the first twelve months of employment and should not be impacted by a short plan year, I wouldn't think. Your pro-rated hours for short plan year apply to hours for vesting and contribution entitlement. Although, if you shift eligibility computation period to the plan year because 1000 hours was not worked in first twelve months and that is the short year then I would say you prorate according to the length of the short year.

[Tom Poje]

there are some things that are never pro-rated

HCE determination. The look-back year is defined as the 12-month period preceding the determination year in accordance with Section 414(q).

 

 

 The period of time considered for vesting purposes must be a 12 month period. Thus, a plan amendment changing the vesting computation period only complies with the regulations if the first vesting computation period established by the amendment begins before the last day of the preceding vesting computation period. An employee who is credited with 1,000 hours in both the vesting computation period under the plan before the amendment and the first vesting period under the plan must be credited with two years of service for vesting purposes.

 

[Labor Reg. § 2530.203-2(c)]