eligibility using eligibility service

[KevinMc]

I have a prototype document that reads service requirements for elective deferrals/profit sharing completion of 1 year of eligibility service.  Hours of service necessary for a year of eligibility service 1,000 (not to exceed 1,000).

Does this mean they have to work a year with at least 1,000 hours and then enter the plan on the next entrance date or they can enter on the next entrance date once they complete 1,000 hours even if it has not been a full year?

 

[Kevin C]

The plan document will say how it works.  If the adoption agreement isn't clear, you need to look at the base document. Our VS document allows both of the options you mention as  separate options in the adoption agreement. 

[Larry Starr]

On 11/20/2019 at 9:50 AM, KevinMc said:

I have a prototype document that reads service requirements for elective deferrals/profit sharing completion of 1 year of eligibility service.  Hours of service necessary for a year of eligibility service 1,000 (not to exceed 1,000).

Does this mean they have to work a year with at least 1,000 hours and then enter the plan on the next entrance date or they can enter on the next entrance date once they complete 1,000 hours even if it has not been a full year?

 

The "normal" use of the one year/1000 hours is that it requires BOTH the completion of a year (12 months) AND having at least 1000 hours. At that point, the person has met the eligibility provisions and now has to meet the entry requirements, which would normally be the next following or coincident semi annual entry dates. That combination allows us to keep out participants as long as legally permissible. 

Now, insurance companies and brokerage firms are notorious for wanting to have provisions that bring people in faster (because that's how they make more money by having more assets to manage), so you do need to confirm the exact language that your plan uses in this case.

[Kevin C]

1 hour ago, Larry Starr said:

The "normal" use of the one year/1000 hours is that it requires BOTH the completion of a year (12 months) AND having at least 1000 hours. At that point, the person has met the eligibility provisions and now has to meet the entry requirements, which would normally be the next following or coincident semi annual entry dates. That combination allows us to keep out participants as long as legally permissible. 

 

That's how it normally works, but keep in mind that the employee can not be required to work the entire 12 months when service is credited for 1,000 hours.  Our document describes it this way:

Quote

... An Employee will receive credit for a Year of Service, as of the end of the Eligibility Computation Period during which the Employee completes the required Hours of Service needed to earn a Year of Service. An Employee need not be employed for the entire Eligibility Computation Period to receive credit for a Year of Service, provided the Employee completes the required Hours of Service during such period.

Cite is 2530.200b-1

Yet another reason why rehires are a pain.

[Luke Bailey]

KevinMc, see if you can find a definition of "entry date."

[buckaroo]

Our AA has a term called "Years of Service for Eligibility Service Purposes" which defines whether or not its immediate or the employee needs to complete the 12 months as well. 

[Larry Starr]

On 11/20/2019 at 4:15 PM, Kevin C said:

That's how it normally works, but keep in mind that the employee can not be required to work the entire 12 months when service is credited for 1,000 hours.  Our document describes it this way:

Cite is 2530.200b-1

Yet another reason why rehires are a pain.

Absolutely; the key here was in the original question, which had to do with when do you meet the eligibility and, therefore, when do you enter.  The answer I gave includes that the 12 months must be completed (even if you have not worked the entire period) so it doesn't matter when you complete the 1000 hours, you have to wait until the end of the year and THEN you enter the plan at the appropriate dates, not sooner.

I don't know what the problem with rehires is. If they were previously in the plan, they come in immediately.  Our software retains SS numbers of every participant that was ever in the plan, so if a "new" employee shows up who was in the plan 10 years ago and was paid out, our software will flag him/her as a rehire and handle appropriately.