Another LTPT Inquiry

Let's suppose an employee meets the 500 hours and completes a Election Form (from the plan) that he/she does not wish to contribute,or submits an Election Form to the trustees that he/she elects to make either a 0% or $0 contribution, but the plan contains the standard 1 year eligibility for employer contributions, would that employee NOT be considered a LTPT employee and therefore, the plan does NOT need to follow the LTPT rule?

Of course the employer conttibution rrquirement would still apply as well as  any required testing.

I do not see anywhere this question has been asked or answered.

Im not sure I see the issue.

Eligibility is 1 year.  Employee does not meet regular eligibility. 

Employee does meet LTPTE requirement.

Why would the employee not be considered an LTPTE?  

There is some missing and some confusing information.  LTPT rules are designed for determining when an employee is eligible to make elective deferrals.  Eligibility to receive an employer contribution really is not relevant to whether or not the employee is a LTPTE.

If the plan's provisions related to eligibility to make elective deferrals are liberal enough to allow an employee who at least works 500 hours or more in an eligibility computation period, then likely anyone who meets the LTPT criteria would be eligible to participate like any other employee who is regularly employed.  (Ignoring for purposes of this comment, non-service related exclusions based on classification.)

Otherwise, the employee needs to have completed 2 consecutive years of employment with 500 or more hours.  The OP does not say how long the employee has worked.  If the employee does not yet have the 2 consecutive years, then the employee is not an LTPT.

If the employee does have 2 consecutive years, then the employee is eligible to defer and is an LTPTE.  It does not matter if the employee elects a zero deferral or completes an election that they do not want to contribute to the plan.  The employee remains an LTPTE. 

Should the employee become eligible to participate in a future year, then the employee will be a former LTPTE and have more liberal rules for determining any vesting in employer contributions.

Just trying ti find a way for a plan ti avoid these aggregios rules.

I would venture that any If any individual works between 501-1000 hours could afforx to defer and will still be considered an LTPT and therefore be subject.

Thesd regs arr for participants thst are eligible and actually do contribute.

Suppose the employee dies not contribute, how can abd should be 100% vested in a zero contribution?

11 hours ago, thepensionmaven said:

Just trying ti find a way for a plan ti avoid these aggregios rules.

I would venture that any If any individual works between 501-1000 hours could afforx to defer and will still be considered an LTPT and therefore be subject.

Thesd regs arr for participants thst are eligible and actually do contribute.

Suppose the employee dies not contribute, how can abd should be 100% vested in a zero contribution?

 

I’m not sure what is being asked anymore. 

Just attempting to finf a way around this.  I venture to say the only way at this point, prospectively of course,would be to change from plan year elig to elapsed time, but that means more for those who are more than 500 hours and would need to be included in any employer contribution.

When the proposed regs were issued I was told by someone who I thought she knew what she was

talking about, that as long as any otherwise eligible employee elected no employee contribution, and had less than 1 year if service, that means the plan is not an LTPT.

At this point, I can only assume that individual did not know what she was talking about.

23 hours ago, thepensionmaven said:

Just attempting to finf a way around this.  I venture to say the only way at this point, prospectively of course,would be to change from plan year elig to elapsed time, but that means more for those who are more than 500 hours and would need to be included in any employer contribution.

When the proposed regs were issued I was told by someone who I thought she knew what she was

talking about, that as long as any otherwise eligible employee elected no employee contribution, and had less than 1 year if service, that means the plan is not an LTPT.

At this point, I can only assume that individual did not know what she was talking about.

An employee is a LTPTE if the only reason they are eligible for the plan is because they met the LTPT rules.  

You are only required to offer the opportunity to defer, employer contributions are only required if they meet the plan's eligibility for employer contributions.  If the issue is employer contributions, LTPTEs are not a problem since you don't have to provide employer contributions to them.

There are two ways you can make sure you never have LTPTEs:

- Eligibility for the plan is 500 hours or less

- Eligibility is based on elapsed time.

Thanks, this will suffice, I think the client is stuck with this as there is no way they want to amend eligibility, which also affect the SHNE and/or go with ET.

28 minutes ago, thepensionmaven said:

Thanks, this will suffice, I think the client is stuck with this as there is no way they want to amend eligibility, which also affect the SHNE and/or go with ET.

Don't forget that LTPTEs have to be auto-enrolled (absent affirmative election) if the client is subject to AE.