"Rehired" if e/e comes back for 1 day as a temp?

Employee is terminated on 4/22/24, his pension paperwork is produced with a Benefit Commencement Date of 5/1/2024. He is then asked to work on an “on-call” basis, so a job is opened for him, but he only works one day for 8 hours on 5/18/24.  Plan is now terminating. 

Plan doc says in order to be considered rehired, e/e has to work 40 hours.  Under this defn, 5/18 would not be considered re-employment and he could go and roll his money out.  But then the plan doc is vague on how employment is defined (just say employee is any person in the employ of the Company).  For vesting purposes, he has not incurred a break in service.  The definition of "Eligible Employee" excludes temporary workers.  

Can he take action on his pension as of date of his termination (4/22) or not until he's done working (i.e., after 5/18?)

Is he is considered re-employed on 5/18 because he's on the books with a job set up? Or does he actually have to work 40 hours a week?  If the plan is vague do I apply common law principles to decide whether he's a temp or an employee?

I'm confused somewhat because you seem to be asking what "can" be done when all the relevant dates in your conundrum have passed. If paperwork for 5/1 commencement was timely sent, returned and benefits commenced, the one day of rehiring did not rise to the level requiring suspension of benefits (assume that is where you were going with the 40 hours). If he has not yet returned forms and commenced then does this matter? Maybe, but most likely not - you mention "rolling out" which is only available if if a lump sum is paid, and again, since we're in July, whether he retired/terminated 4/22 or 5/18 doesn't matter for a lump sum (unless it also affects the actual calculation of the benefit).

Hi Ken.  It does affect the actual calculation of the benefit -- the pension amount would decrease due to different interest rates if new paperwork is issued.  Does that change your answer in any way? if the one day he worked on 5/18 is enough to treat him as re-hired (thus no break in service) he's not considered terminated until after that date.  Thoughts?  Thank you

On 7/16/2024 at 4:59 PM, erisageek1978 said:

-- the pension amount would decrease due to different interest rates if new paperwork is issued. 

I'm skeptical about the above statement.

Based on my read of the original post, the plan should process his benefit with a BCD of 05/01/24.  The one-day of compensated time on 05/18/24 has no bearing on the BCD or the amount of the benefit.  Don't overthink it.

ok thank you

@CuseFan can you clarify your statement: "If he has not yet returned forms and commenced then does this matter? Maybe, but most likely not - you mention "rolling out" which is only available if if a lump sum is paid, and again, since we're in July, whether he retired/terminated 4/22 or 5/18 doesn't matter for a lump sum (unless it also affects the actual calculation of the benefit)."

In our case, forms were processed but not returned and benefits have not yet commenced.  He would be taking a lump sum, but hasn't taken it yet.  Why doesn't it matter for a lump sum when he is terminated (4/22 or 5/18).  If paperwork was processed after 5/18, I'm told interest rates would affect the amount of his payout.

Thanks

The applicable interest rate for 417(e)(3) is tied to the stability period containing the annuity starting date - not the termination date. So if the stability period is the calendar month, then the interest rate would change if the distribution is paid in July versus, say, August. However if the stability period is the calendar year, then the interest rate would not change until January.

It's possible, although it seems unlikely to me, that the actual accrued benefit (not just the lump sum equivalent) could be affected by one day of re-employment. You'd have to look at the plan's benefit formula to see.