entry date - 3 consecutive months of continueous service

[Lou81]

Hello!  Looking for some help.

i have an plan on an FTW document.

the eligibility is 7g.  completion of 3 consecutive months of service (not to exceed 12; hours of service failsafe applies)

Entry dates are 1/1 & 7/1

I have an employee hired 4/3/2023.  Would they enter the plan 7/1/2023 or 1/1/2024?

I am thinking that if they they worked at least 1 hour in April, May and June, they would enter 7/1/2023.

Appreciate your thoughts.

[CuseFan]

I looked at the FTW basic DB document, assume DC is same. In definition of year of eligibility service for elapsed time you count 12 months from the date of hire, and it says for periods shorter than 12 months you substitute such shorter period in that definition. The 3 months is satisfied 7/3 (7/2 - depending on how you interpret and there have been countless discussions on that in this forum) and entry is 1/1/2024. Note the document also says in aggregating elapsed time service for eligibility for non successive periods that 30 days equals a month.

[Paul I]

In the FTW document, B7g looks at continuous employment (B7f looks at hours within months). 

There also is an election available in B7L for what happens if an employee does not meet the eligibility requirement in the first consecutive month period.  The example in the note in the adoption agreement only refers to calendar months and does not indicate elapsed time rules apply (note the B7g requires continuous employment).

The Plan Administrator needs to make a decision here.  The first work day in April of 2023 was April 3. The PA can decide that the employee was continuously employed for April, May and June and allow the employee to participate as of July 1.

The PA can decide that the employee was not continuously employed throughout April and would look to applicable plan provisions in B7L for what to do next.  The PA can apply rolling successive consecutive 3 month periods or rolling consecutive 3 month periods starting from the beginning of each month.

If nothing is checked, the PA needs to decide how to interpret the plan, including looking at continuous employment for a 3 month period starting on the employee's hire date and continuing up to the 3 month anniversary of the employee's hire date.

In short, if the PA counts April as a full month of continuous employment, the employee enters on July 1, 2023.  Under all other scenarios, the employee enters on the January 1, 2024.

The PA must apply the decision made here on a uniform and consistent basis for all other determinations of employee eligibility and entry dates.

 

 

[BG5150]

Maybe ask FTW.

[Paul I]

My experience with FTW is they will point out where in the documents there are relevant provisions but will not provide an interpretation of a plan's choices made in the adoption agreement.

[Connor]

Don't be surprised if FTW just tells you to consult with ERISA counsel, the answer I usually get when I ask for a clarification in their doc provisions.  

[Belgarath]

We've been through this exercise with our documents (not FTW) as well. I agree with Paul - different interpretations may be used, and the PA needs to make a choice, and use that choice consistently.

[Lou81]

Thank you all!

 

[Riley Britton]

1/1/2024 definitely! 

[Jakyasar]

What is elected on item 9, "entry timing for plan participation"? Sorry not listing here as I am not sure if permitted.

Entry dates themselves are not enough to make a determination.

IMHO

[Roycal]

I'm not familiar with the "FTW" document referred to (which I take must be some sort of a "form" document), but for interpretive questions like this, look to the plan document itself.  Per the document, who is responsible for interpreting plan provisions?  Likely, the plan administrator (employer or a committee, for example).  As others have said then, the plan administrator needs to make the decision.  But more than that, the decision should be well reasoned and the process of making the decision, not just the decision itself, should be documented in writing for the plan's records.  Obviously, the plan administrator should take into account appropriate advice from third parties, but should keep in mind that it is responsible for the final decision, not the third party.  It may be difficult to convince the plan administrator of it's responsibilities for the plan, but that must be tried.

[Roycal]

Adding to my comment above, also make sure this decision is communicated to employees of the company, preferably in a clear provision, by way of example, in the SPD.