PTLT

[thepensionmaven]

I just can not fathom a PT worker wanting to contribute to an employer 401(k)- I can't be the only one!!

No one has said anything about a LTPT employee doing an election form with either $0 or 0% of pay, which would appear to solve the problem.

I would think clients will scream like stuffed pigs if they have to bring in LTPT employees in any event.  At least some of mine have.

If I change eligibility to 1 YOS and drop the hours requirement, I don't think you can do that for only deferrals as well I don't think software can handle it; and keep the customary age 21/1,000 hours within a 12 month period for the SH and profit sharing contributions, if any are to be made.

I would think the other options would either be elapsed time (but this would apply to FT as well) or change eligibility to age 21/500 hours, but that again would apply to all eligible.

Then again, and pardon my ignorance, the 500 hours is for entry or entry and contribution, or both?

Too many changes to digest - starting to question whether this is worth it.

[Belgarath]

Just now, thepensionmaven said:

I just can not fathom a PT worker wanting to contribute to an employer 401(k)- I can't be the only one!!

I'd say 99% of the time you are right. But we do have situations where one spouse makes a ton of money and the other just works part time, or perhaps a family business where the child works part time, etc. so it does sometimes happen.

[C. B. Zeller]

2 hours ago, Belgarath said:

I'd say 99% of the time you are right. But we do have situations where one spouse makes a ton of money and the other just works part time, or perhaps a family business where the child works part time, etc. so it does sometimes happen.

It was pointed out to me elsewhere, that the way the proposed regs deal with testing could really foul things up in some cases where you have LTPT HCEs. It will be interesting to see how this plays out.

[Belgarath]

6 minutes ago, C. B. Zeller said:

It was pointed out to me elsewhere, that the way the proposed regs deal with testing could really foul things up in some cases where you have LTPT HCEs. It will be interesting to see how this plays out.

SKREEEEEEEEEEEEEKKKKKKKKKKKK! Fingernails on a chalkboard. 

[Paul I]

There will be HCE LTPTs, for example, in hospitals where per diem employees have been receiving exceptionally high compensation, and in businesses where the failure-to-launch children of the owners are working part-time. 

The LTPT rules are insidious!

It will be interesting to see if the IRS takes a hard line on enforcing missed deferral opportunity corrections on companies who were not able to timely implement the LTPT rules, or just guessed wrong on how to identify LTPTs. 

It also will be interesting come 2025 to see what plan auditors will feel obligated to report about whether LTPTs were handled correctly.

[Gilmore]

4 minutes ago, Paul I said:

It will be interesting to see if the IRS takes a hard line on enforcing missed deferral opportunity corrections on companies who were not able to timely implement the LTPT rules, or just guessed wrong on how to identify LTPTs. 

All of our One Year of Service plans shift the computation period to the plan year, so for the most part we are dealing with just January 1 entry dates for LTPTs.  I'm assuming non-auto enroll plans would still get to use the first 3 months of the plan year to find missed LTPTs and correct without a QNEC?  One more reason for clients to get us their census data asap.

[thepensionmaven]

Question has arisen, would recommend amending plans to allow 1 year of service and cut out the 1,000 hour requirement.

[Belgarath]

Honestly, I have not developed an opinion as to what is "best" - I know some people have strong opinions, but I'm not one of them, and I'm not at all sure there is one "best" solution. Plans and employers have some wildly different situations, and we haven't yet worked with enough real life situations to really get a handle on what may generally be the best solution.

I expect you will get some recommendations from other members.

[Paul I]

If the suggestion is to require 1 year of service and no hours requirement, essentially you have an elapsed time eligibility service which would allow all PTs to participate (not just employees who would be considered LTPT).

[Gilmore]

4 hours ago, Paul I said:

If the suggestion is to require 1 year of service and no hours requirement, essentially you have an elapsed time eligibility service which would allow all PTs to participate (not just employees who would be considered LTPT).

Does that change if the document requires "consecutive months" of service?

[Gilmore]

21 minutes ago, Gilmore said:

Does that change if the document requires "consecutive months" of service?

Meaning, we have a couple of plans that require, for example, "six months of consecutive" service.  We have been advising those clients that they are still subject to the LTPT rules since an employee with an irregular work schedule may never have six months of consecutive service, but may work 1000 hours in a computation period.  I'm assuming this means they would then also have to apply the LTPT eligibility.

[Paul I]

If the document requires "consecutive months" of service, then there needs to be a clarification on how that will be administered. 

One interpretation focuses on the "consecutive" aspect where the employee works a period of a number of months without having a termination date.  The service measurement would have to provide a backup calculation if the employee has 1 Year of Service (at least 1000 hours during the eligibility computation period).

Another interpretation focuses on what is a "month".  I have seen provisions where a "month" is a calendar month in which the employee works at least 1 hour, and may be paired with an hours equivalency of 190 hours per month.  This service also would have to provide a backup calculation if the employee has 1 Year of Service.

There is something of a Catch-22 here.  If service is not measured using elapsed time, then any other service measurement will contain an hours requirement or a need to be backed up by a 1 Year of Service rule which contains an hours requirement.  Administratively, we are stuck with counting hours.

[Gilmore]

Thanks Paul.  The document we use defaults anything that does not specifically use Elapsed Time as defaulting to the hours of service failsafe.  That is why we are advising the few clients that do use the consecutive service option and do not want to follow the Elapsed Time rules to also take into account the LTPT rules.