LTPT - sometimes I think that's all w2e are here for... anyway

I have seen this statement, or similar wording, in several places, and I think I must be misunderstanding something. If the pre-approved plan language for eligibility allows for, say, "3 consecutive months of service from the Eligible Employee's employment commencement date and during which at least 250 hours of service (not to exceed 1,000) Hours of Service are completed. If an Eligible Employee does not complete the stated Hours of Service during the specified time period, the Employee is subject to the 1 Year of Service requirement..."

So, if an employee works less than 250 hours in that first three month period, they become subject to the 1 year of service requirement. Suppose they work 600 hours during the next 3 (or 2) consecutive plan years. Why would they not be considered LTPT?

The LTPT rules will only affect 401(k) plans whose eligibility requirements require employees to complete at least 500 hours of service in a 12-month period to participate. 401(k) plans that require fewer hours - or none at all - will never produce a LTPT employee, making the new rules moot.

They would be LTPT - the catch in the 'rule' is that it's a 500 hour & 12-month period. The example you used is less than 12-months. So the only easy 'reference' is 12-month periods; any shorter computation period is potentially subject to potential LTPT. 

Belgarath, you’re on to something.

Even if the underlined statement might be generally so, there are many possible variations about when and how a plan measures service and other entry conditions.

Further, even a plan with no service condition might have a class exclusion that the proposed rule to interpret IRC § 401(k)(2)(D) might treat as a proxy age or service condition, which might involve entries of some employees only because one is a § 401(k)(2)(D)(ii) employee.

Ok, thanks. I was beginning to doubt my sanity, although I suppose that ship has sailed...

Or like the song says, "It's getting to the point, where I'm no fun any more, I am sorry..."

Belgarath, the plan eligibility language for earlier entry has 2 components:  a time period of 3 consecutive months starting on the hire date and a count of hours of 250.  If a participant meets these requirements, they are eligible to participate in the plan and will never be considered an LTPTE.

The 3 consecutive months period is anchored by the hire date and if the employee does not become eligible under this entry rule, the employee will never be eligible to enter the plan unless the employee subsequently meets the 1000 hours in a year rule (which the plan may or may not shift from anniversary hire dates to plan years).

The LTPT rules will apply the employee will become an LTPTE once the have the requisite 500 or more hours in 3 (changing to 2) consecutive Eligibility Computation Periods.

I, too, have seen comments similar to your bold, underlined text.  These comments are misleading, and as Peter notes, the interplay between earlier entry provisions and the LTPT rules can be complicated. 

I believe much of the available commentary is part of a good-faith effort to alert plans that there are multiple options available in approaching how to administer the LTPT rules.  Unfortunately, the commentary often does not come with a warning that a plan must follow its provisions and regulatory guidance on identifying LTPT employees.