Eligibility Help

[pixiebear]

Employee was hired 8/22/2022 and terminated 1/31/2023 and worked over 1000 hours in that period. Employee was rehired 8/15/2024. The document states the following eligibility:

Each Eligible Employee shall become a Participant eligible to make Elective Deferrals on the first day of the calendar month coincident with or next following the date he attains age 21 and he completes 6 consecutive month(s) of service; provided that he is an Eligible Employee on such date. If the service requirement is not met in the first consecutive period of months, each successive period shall begin immediately after the preceding period and shall end on or before the first Eligibility Computation Period after which time the Plan will revert to 1,000 Hours of Service in an Eligibility Computation Period. The service requirement under this Subsection shall be deemed met no later than the end of an Eligibility Computation Period during which the Employee completes 1,000 Hours of Service; provided that the individual is an Eligible Employee on the applicable entry date. Service taken into account for purposes of this Section shall be determined under the terms and conditions as is specified for determining a Year of Eligibility Service. 

The Eligibility Computation Period is the first 12 months from commencement of employment to the anniversary of commencement of employment. Then it switches to the plan year of January 1 to December 31.

Since the employee did not work 6 consecutive months but did work 1000 hours in his first period of employment, would the employee be eligible upon rehire? Am I determining this correctly?

[ESOP Guy]

Does the document have a section that deals with rehires?  Most of them do.  It is typically near the primary eligibility section.  If you are dealing with a document with a base document, like a prototype plan, check it. 

The vest majority will tell you in pretty good detail how to handle someone who met eligibility but didn't enter except for the fact they weren't employed on an entry date.  

The guy who taught me this business back in the early '90s told me that 99% of your questions will be answered by reading the document carefully.  I would recommend you look for a section that spells out what to do with rehires.

Here is an example of a Volume Submitter plan our firm uses as an example of what I am talking about:

 

Rehired Employees. Subject to the Break in Service rules under Section 2.07, if a terminated Employee is subsequently
rehired, such Employee will be eligible to participate in the Plan on his/her reemployment date if the Employee is an Eligible
Employee, and the Employee had satisfied the Plan’s minimum age and service conditions and reached his/her Entry Date prior
to termination of employment. If the Employee had satisfied the Plan’s minimum age and service conditions, but terminated
prior to reaching his/her Entry Date, the Employee will be eligible to participate on his/her reemployment date or the original
Entry Date, if later. If a rehired Employee had not satisfied the Plan’s minimum age and service conditions prior to termination
of employment, such Employee is eligible to participate in the Plan on the appropriate Entry Date following satisfaction of the
eligibility requirements under this Section 2. For purposes of Salary Deferrals, the requirement to participate on the
reemployment date is deemed satisfied if a rehired Employee is permitted to commence making Salary Deferrals within a
reasonable period following reemployment.

See how clear this is spelled out?   That was found in the base document not the Adoption Agreement part. 

My guess the person enters based on seeing so many documents over the decades but I really think looking for a rehire section of the document will confirm that or not.