Revenue Procedure That specified assuming same hours as prior year

[Tedterrific]

I believe there is a Revenue Procedure that specifies that if a participant had less than 1,000 hours in the prior year (and therefore no benefit accrual according to terms of the plan ), you MUST assume they will have 1,000 hours in the current year. This is for purposes of a BOY actuarial valuation. 

I thought it was in RP 2017-56 or 2017-57, but I cannot seem to find it. 

I’m asking because client (of owner only plan) wants to minimize cost for 2020 and if they confirm <1,000 hours in 2019 we can assume same for 2020 and not have a normal cost. 

[Effen]

I have never heard of anything like that.  That wouldn't make any sense at all.  Why would have to assume someone who is working less that 1000 hours in the current year would work more than 1000 in the next?  

Expected hours is an "assumption", and therefore needs to be reasonable - that is you as the actuary.  Also, keep in mind in the end it doesn't matter what you assumed, it matters what actually happened.  If you assume <1000, but he works more than 1000, the NC that you didn't recognize gets shifted to liability in the next year and he still has to pay for the benefit. 

Maybe amend the plan to freeze the benefit before he earns 1000 hours.  Tell him to send you a letter stating he worked less than 1000, the implement a freeze.  That way the liability is on him, not you.  Also, make sure the plan has a 1000 hour rule.  Many of our one-life plans have a 1 hour rule, not a 1000 hour rule.