Vesting question - elapsed time

The plan requires the following Vesting Years of Service  1-yr 0%; 1 yr - 50% and 2 yrs 100% on PS and Match.   Years are based on Anniversary Year and there is no hour requirement for vesting.  Plan as immediate eligibility as background. 

Example: DOH 3/1/2023; DOT 9/30/2024. The plan record keeper has their distribution set at 50% vesting because according to them the participant did not complete the second full 12-month anniversary year.  The participant did complete 1000+ hours in the first anniversary year and in the second short year. 

I realize a Year of Service for vesting cannot require more than 1000 hours but can it require a full 12-month Year of Service?  As I write this I'm thinking this person perhaps should have been 100% vested.  The record keeper directly mentioned they did not make it to their second anniversary date for full vesting.  I realize this plan is much more liberal over vesting than allowable.  One alarm in the plan document system (FIS) I cannot get rid of the mention of 1000 hour for a Year of Vesting Service even though that is not checked.

As a side note FIS users when I choose elapsed time for vesting, I cannot select Anniversary Year instead of Plan Year for vesting service determination.

Comments are greatly appreciated.

Tom

Elapsed time means elapsed time. This person will have 1 year and 7 months of vesting service.

As long as you don't have stop working and rehire, elapsed time is easy. Every anniversary of DOH means vesting years = prior vesting years +1.

The whole point of elapsed time is so you don't have to track hours.

Tom, are you saying the plan defines a Vesting Computation Period (VCP) based on anniversary date of hire and no hours requirement, or the plan say vesting is based on elapsed time?

If it is elapsed time, then the participant would need to have a 2-year Period of Service to get to 100% vesting.

If the plan has a VCP based on anniversary date of hire, consider what would happen if the plan specified 1 hour as the number of hours in a VCP to earn a year of vesting service.  Under this scenario, the anyone who worked 1 hours in a VCP would get credit for the full year.  Essentially, if the participant was credited with one hour of service on or after 3/1/2024, they would be 100% vested.

The question seems to be is there a distinction under the VCP/hours methodology if the required number of hours in a VCP is 0 hours or 1 or more hours? In other words, does 0 hours in a VCP automatically trigger elapsed time rules?

Since elapsed time rules in this situation are less favorable to the participant, there is an argument to say elapsed time rules are not triggered by a 0 hours requirement.

Thank you for your comments.  I did a little more research on this since this was new to us - all our plans use plan year 1000 hour for Year of service for vesting.

My reading confirmed when using elapsed time, a participant gets a year of vesting service at each anniversary date regardless of hours. 

This is what the record keeper was doing.  Thanks all