change plan eligibility to get out of LTPTE?

I may have out-clevered myself.

We have a bunch of plans with a YOS, 1000 hours eligibility requirement.  To avoid LTPTE issues, I suggested that an option was to change the definition of YOS for eligibility to 500 hours.  Still gets to keep employees out for 12 months.

As I'm writing an amendment to implement this, I realized that this could be more sweeping than I realized: does the plan sponsor have to go back to each person's DOH to see if they meet the new requirements?

The EOB says that if you are making eligibility more stringent, you have the option to grandfather in the prior eligibility requirements for those who have already met them (and there are threads on this board that support that).  So... if I'm making them more loose, do I also have that option?  It seems reasonable.  And if I do... then can I limit the looking back to plan years starting in 2021 (basically, the LTPTE period)?  Since I'm making the plan more inclusive than it needs to be, I'd think that is OK, too (making good language for that is not easy, but I'll figure it out).  I don't want to have to determine if someone worked 550 hours in 2010 and has been at 400 since then.

Thanks...

Yes you do. But that’s a one time search and most clients doing this are smaller. And if tracking vesting years based on 1,000 hours your limited to people who have zero vesting years.

but the large non-top heavy plans we almost exclusively switched 401k eligibility to some short elapsed time (or they were there already). There will be some research but expect it to be limited. 
 

this one time project is a small price to pay to avoid LTPT rules…

9 hours ago, austin3515 said:

this one time project is a small price to pay to avoid LTPT rules…

I think this hits the nail on the head.  Thanks.

I'm thinking that I can write the amendment to "only" look back to 2021 because it's still more inclusive than the current rules.   Unless, of course, it only catches HCEs.

I did see an attorney do it that way.  Personally I think this is short sighted because a) the verbal gymnastics involved in adding that provision will be signficant (loss of reliance on pre-approval?). And what if they leave you?  Will their new provider understand what you were doing? Take over your language correctly?  I just really think it's going to be a lot more isolated than you think.  Maybe if you had a significant outlier plan or something, keep that in your back pocket. But if you amend "hundreds" of plans this way, long-term someone else messes that up. 

I'd peronally hate to have a long-term complication to solve a short-term problem.  I've thhought aboutt his the same as you for a long time.  That's where I landed, obviously it's a gut call!