Yet another LTPT question

I swore I wasn't going to think about 2.0 today, but when I let my guard down, things pop into my head.

Curious as to thoughts of others. Many plans revert to calendar year for service counting after the initial eligibility period. If you handle the LTPT employees the same way, then they could come in even faster than strictly required? Suppose DOH is 11/1/2023. From 11/1/23 - 12/31/2023, works 100 hours. From 1/1/24 - 10/31/24, works 600 hours. So if service counting reverts to plan year, then employee would have two years of service crediting, and enter on 1/1/25. Alternatively, if plan uses anniversary years, this employee likely wouldn't end up being eligible until 1/1/26.

I'm not clear as to whether the plan can "carve out" these employees via the SECURE 2.0 Amendment, and use anniversary years just for LTPT? I'm assuming the answer is no, but I haven't done any analysis on that question.

Assuming it is not possible (or even if it is possible) would you change your plan (or LTPT portion of the plan, if permissible) to anniversary date service crediting? I wouldn't... too complicated, and these people generally aren't going to defer regardless, so if they end up entering earlier than strictly required under the law, big deal.

Of course, I'm on a seriously overloaded 2.0 circuit at this point. I shouldn't think about this garbage on a Friday....

I dont think you can carve the LTPTs out the way you describe.  

I also don't think it will be that big of an issue for the vast majority of plans, so amendments to keep them out will be rare.  The biggest issue is if you have enough of LTPTs that you have to count as participants for 5500 purposes, you may become a large filer.  

I started looking into SECURE Act (1.0) for this question.  Section 112(D) Special Rules, (ii) 12-Month Periods states:

"12-month periods shall be determined in the same manner as under the last sentence of Section 410(a)(3)(A).  (emphasis added)  Here's a link to that section:

https://www.congress.gov/bill/116th-congress/house-bill/1994/text#HC55DED3AE9484080ABD306FA8E518F6A

I don't find that specific section in 410(a)(3)??  I find little "a", but not capital "A" section.  Can someone please point me to that?

(3)Definition of year of service

On 1/13/2023 at 12:38 PM, Bri said:

(3)Definition of year of service

(A)General rule

For purposes of this subsection, the term “year of service” means a 12-month period during which the employee has not less than 1,000 hours of service. For purposes of this paragraph, computation of any 12-month period shall be made with reference to the date on which the employee’s employment commenced, except that, under regulations prescribed by the Secretary of Labor, such computation may be made by reference to the first day of a plan year in the case of an employee who does not complete 1,000 hours of service during the 12-month period beginning on the date his employment commenced.

As we are reading this, for non-calendar year plans, for those hire after 1/1/21 and before the beginning of the plan year that begins in 2021, a LTPT worker can enter the plan on the first day of the plan year that BEGINS in 2023....  As an example, consider this (which Davis and Hartman (attorney's for SPARK) said seems correct (absent further guidance):

Facts:

• Off-calendar year plan with a 7/1 anniversary date.
• The first plan year for which the long-term part-time provisions apply is the 7/1/21 plan year (the first plan year starting after 12/31/20).
• The plan’s eligibility computation period switches to the plan year after the first anniversary year.
• The plan has monthly entry dates.
• The part-time employee in question is at least 21.

 Example 1: (Participant A)

• Hire Date 2/16/21
• First computation period 2/16/21 through 2/15/22 (do we have to count this period because it begins after 12/31/20 but before the 7/1/21 plan year?)
• If yes….
  • Second computation period 7/1/21 through 6/30/22
  • Third computation period 7/1/22 through 6/30/23
  • If the individual works 500 hours in each of these periods, they will enter the plan as a long-term part-time employee on 7/1/23
  • If this is the answer, this individual enters the plan before the individual hired on 11/16/20 (example 2)
• If no…
  • Second computation period 7/1/21 through 6/30/22
  • Third computation period 7/1/22 through 6/30/23
  • Fourth computation period 7/1/23 through 6/30/24
  • If the individual works 500 hours in each of these periods, they will enter the plan as a long-term part-time employee on 7/1/24

I think I need a visit to Dr. Kevorkian...

It has been suggested that you can have two eligibility computation periods.  One for everyone but LTPT, and a separate one for LTPT.  There is no requirement that you flip to the plan year (or calendar year) after the initial eligibility period - BUT, can you actually have two different eligibility periods?  I would suggest that if you do something different for LTPT, you'd also have to track them under the regular eligibility rules, because, oh, well, maybe they may actually get 1000 hours, and you'd have to treat them not as LTPT.

Also, who wants to track hours on successive anniversary dates for EACH individual that may be LTPT....

And Dr. Kerkorian visited himself and is no longer with us.  The lawyer who represented him advertises a lot (as an ambulance chaser) and is raking it in.  He's in Michigan (where I have a vacation home, so you can't miss him).  Amazingly, he doesn't tout his successful (mostly) defense of the good Doctor Death....