austin3515 Posted January 6, 2024 Posted January 6, 2024 Trying to write some formulas... Plan Year End = 12/31. Participant is hired on 12/31/2023. Their first 12 months is finished 12/30/2024,which is year 1. Their 2nd year (assuming switch to plan year) is calendar 2024. Agreed? And if their hire is 1/1/2024, and their 12 months is finished 12/31/2024, because that coincides with the plan year exactly, clearly we would not count the same exact 12 months, right? I could see someone (especially a formula if one is not careful) mistakenly crediting the same 12 months twice because it counts both the first 12 months AND the first full plan year). Austin Powers, CPA, QPA, ERPA
Peter Gulia Posted January 7, 2024 Posted January 7, 2024 If the first eligibility computation period for counting to 500 hours begins with the first day on which the employee is credited with an hour of service and the plan provides that the second period is the calendar plan year that begins within the first period, your first example might show a generosity in counting two 12-month periods in as little as a year and a day. The Treasury department’s explanation of its proposed rule speaks, indirectly, to your first example. See page 82802. https://www.govinfo.gov/content/pkg/FR-2023-11-27/pdf/2023-25987.pdf You are right that software designers and programmers ought to be accurate, complete, and careful about how one expresses tax law rules in software. Luke Bailey 1 Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com
Popular Post Paul I Posted January 7, 2024 Popular Post Posted January 7, 2024 The application of the shifting rules applicable to the eligibility computation periods for LTPTEs is the same as these rules have applied since the 1970s. (The original example and the comments below are for a calendar year plan year.) No new programming required. First example The first Eligibility Computation Period starts on the hire date and ends on the day before the anniversary of that hire date. In the first example above, an employee with a 12/31/2023 hire date has a first ECP from 12/31/2023 ending 12/30/2024. The shifting rule says the second ECP starts on the first day of the plan year that contains the first anniversary of the date of hire. Applying shifting rule to the first example, the first anniversary of the date of hire is 12/31/2024. The first day of the plan year that includes the first anniversary of the date of hire is 01/01/2024, so the second ECP is 01/01/2024 ending 12/31/2024. Second example Moving to the second example, the first ECP starts on the hire date and ends on the day before the anniversary of that hire date. An employee with a 01/01/2024 hire date has a first ECP from 01/01/2024 ending 12/31/2024. Applying shifting rule to the second example, the first anniversary of the date of hire is 01/01/2025. The first day of the plan year that includes the first anniversary of the date of hire is 01/01/2025, so the second ECP is 01/01/2025 ending 12/31/2025. The key to how this has worked all along is the consideration of the first anniversary of the date of hire to determine the start of the second ECP. DMcGovern, Luke Bailey, Peter Gulia and 2 others 4 1
austin3515 Posted January 8, 2024 Author Posted January 8, 2024 23 hours ago, Paul I said: The key to how this has worked all along is the consideration of the first anniversary of the date of hire to determine the start of the second ECP. You only needed one all along so it never mattered, LOL. Even the 2 year eligibility plan "never" switched to the plan year. Thanks though for the stellar response! And thankfully it lines up with how I wrote my formulas! Austin Powers, CPA, QPA, ERPA
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now