One Year Holdout

[EBECatty]

I'm probably missing something obvious. A PS plan defines a year of service for eligibility as 1,000 hours. Actual eligibility for PS contributions is three months of continuous service. For purposes of applying the one year holdout rule, does a rehired employee have to complete 1,000 hours or three months to rejoin the plan?

[Bri]

Does the plan document address the holdout rule in terms of Years or Breaks in Service?  If a Year of Service must be completed, then I'd check how the document defines that term as well (like, do you get credit upon 1000 hours, or do all 12 months have to elapse).

[EBECatty]

The plan contains the regular rule that a participant will not re-enter the plan until they complete one "year of service" after being rehired following a break in service (year with <500 hours).

The AA defines "year of service" for eligibility purposes as 1,000 hours. But the actual eligibility rule for plan entry is only three continuous months of service.

It seems odd that a rehired holdout would require 1,000 hours to rejoin the plan when the actual eligibility condition for all other participants is only three months. So, for example, if a rehire is brought back part-time following a break in service, they could work three months in a row, but never work 1,000 hours in a year.  Do they ever come back in?

[Bri]

Any way it could be amended either going forward or retroactively to have it reflect what you or the sponsor actually want?

(I did a little Sal skimming and the related Code/Regs.  Not immediately obvious.)

[CuseFan]

Personally, I think this is poor if not incorrect design/completion of AA. Defining a YOS for eligibility has no relevance when a YOS is not a requirement. And you have a further disconnect using hours for eligibility YOS and BIS when eligibility is based on elapsed time. The application of this - someone having to complete a YOS to eligible upon rehire after only having to complete 3 months after initial hire - should be evidence enough that the combination of those provisions is improper and incompatible.

[EBECatty]

Agreed, CuseFan, as written it makes no sense. I think that's what caused my initial confusion. Will take it back to the document provider to see if they can clarify what was intended by this particular combination. 

[Doc Ument]

Your question strongly implies that you have found the hold-out language (or option), but I point out that not every document contains that rule or offers it as an option.  If it's there, ask the document provider.  If it not there, you cannot use that rule.