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Rules of Parity Cheat Sheet


austin3515

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see the attached.  I'm very happy with this. Every time rule of parity would come up I would research for an hour.  I finally wrote this down.

Let me know what you think!  I would incorporate suggestions and reshare.

[Edited to add revised pdf, 1/24/2021 in the early am][Edited to reattach the revised PDF per suggestions/corrections].

 

Rehires And Rule of Parity.pdf

Austin Powers, CPA, QPA, ERPA

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It looks like your 2nd and 4th column are basically a repeat.

You have the two big ones in my opinion.   If they ever deferred or had any vesting in the past you have to give them their old service.   Those two rules means 90%+ of the time you have to give them their old service back. 

 

That is so true that I have reached the point that I think most plans ought to be written to simply give everyone their service back.   It would save you hours of research (or feel the need to make a cheat sheet) to get to that point 90%+ of the time.   😀

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12 hours ago, ESOP Guy said:

It looks like your 2nd and 4th column are basically a repeat.

Precisely a repeat! Whoops!  Obviously there was some reconfiguring/ordering going on.   Thanks for looking at it!  I revised the attachment in the first post.

Austin Powers, CPA, QPA, ERPA

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Thank you for the attached.

Here is a question for a DB plan - out of curiosity as was just presented to me a few minutes ago. Plan requires 1000 hours for accrual and vesting. It is EOY val.

Date of hire: 12/1/2018

Calendar 2019 worked over 1000 hours

Date of participation: 1/1/2020

Date of termination: 3/31/2020 - 750 hours from 1/1/2020 to 3/31/2020

As of 3/31/2020 did not accrue any vesting service i.e. terminated with 0% vesting.

Rehired 10/1/2020 and accrued another 500 hours of service for a total service in excess of 1000 hours for 2020. No Break-in-service.

Language from the document - the box is not checked

[ ] Rule of parity. If an Employee does not have any nonforfeitable right to the Accrued Benefit derived from Employer contributions, exclude eligibility service before a period of five (5) consecutive One-Year Breaks in Service/Periods of Severance.

[ ] Rule of parity. If an Employee does not have any nonforfeitable right to the account balance derived from Employer contributions, exclude Years of Vesting Service earned before a period of five (5) consecutive One-Year Breaks in Service/Periods of Severance.

The way I read this (might be totally wrong) since not checked, this participant continues to be active for 2020 and accrues a benefit and also vesting service.

Your comments are appreciated.

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