need help with elapsed time/eligibility

[rr_sphr]

We are a not-for-profit that is  the plan sponsor of a 401k plan that has a 6 month elapsed time eligibility period .  

A temp employee has had the following service :

worked 3/11/19-5/31/19 or 2.67 months, break in service was 2.56 months, and then worked 8/19/19-9/6/19 or .59 months. (no 1 year break in service)

The next break in service will be around 1-1.5 months if she is rehired in the next week or so. 

If service is 6 months from original hire since her breaks were so small, she is pretty much immediately eligible.  If not, she would need to earn 2.75 more months of time to be eligible.  It makes a difference for costs for funding/grants/etc.  I hate counting pennies, but we must! And honestly I'd like to get it right going in rather than a correction at year end!

Our plan document has a section that states "Rehired Eligible Employee who had not satisfied eligibility : If any Eligible Employee who had not satisfied the Plan's eligibility requirements is rehired after severance from employment, then such Eligible Employee shall become a Participant in the Plan in accordance with the eligibility requirements set forth in the AA and the Plan.  However, in applying any shift in an eligibility computation period, the Eligible Employee is not treated as a new hire unless prior service is disregarded in accordance with" (rule of parity, 5  one year breaks or one year old out rule)."

My TPA contact is out of the office through Monday.  And their backup told me they couldn't give me an answer and were unwilling to look it up or research it for me (yes, another reason to find a new TPA!)

Anyone want to offer their advice/opinion?

[duckthing]

Unless I'm missing something in the facts as you outlined them, these periods of severance should be included in determining her eligibility service under the "service spanning" rules. The language you quoted from your plan doc just says that this person's eligibility computation period didn't restart each time they were hired after a period of severance, since they have not yet had a one year break in service.

[Kevin C]

Using elapsed time to determine service includes a service spanning rule that gives the employee credit for a period of severance not exceeding 12 months if they rehire within 12 months of their termination date.  In your example, she was gone less than 12 months (5/31/19 - 8/19/19), so service is credited the same as if she was continuously employed from 3/11/19 - 9/6/19.  6 months of service would have been satisfied on 9/10/19, but she was not employed on that date.  When she rehires less than 12 months after 9/6/19, the service spanning rules will give her credit for the time from 9/6/19 through the rehire date.  She gets credit for that service when she rehires again, so I would say she will satisfy the 6 month of service requirement upon her pending rehire.  

[rr_sphr]

gotcha....thanks!!!  I so appreciate y'alls help.  It makes sense they way you have explained it.  And good to know moving forward!

 

 

[david rigby]

Is this common?  If so, you might want to consider amending the plan to a simpler method.  Yes, such method might conflict with your need to "count pennies"; trade-offs.