Dual eligibility for different classes

I would appreciate help from the TPA compliance experts here! If a 401k ERISA plan is drafted to have a 12 month elapsed time eligibilitity for matching contributions for full time employees and a One Year of Service under the hours method for match for part time employees, does this invoke 410(b) coverage testing? Thank you!

The eligibility service requirement for full and part time employees is the same--one year of service. One year of service, however, is calculated using different methods that are both allowed under the DOL Regulations. Nevertheless, I do not view this as different eligibility criteria for full time versus part time. 

410(b) is always "invoked" even if full and part time employees have the same eligibility criteria. 

So if part time never complete 1000 hours to earn the one year, it requires 410b coverage, just as if they do not earn one year under elapsed time? Is this what you are saying? THanks!

I'm not clear on your question--are you asking whether the part time employees who have not met the 1000 hours to meet the one year of service requirement may be excluded from 410(b) testing? Yes, they may be excluded no matter how you measure a year of service (elpased time or hours of service). 

Why would they be excluded - I meant the plan could be subject to 410b testing if there is an HCE in the lower group then you have to do coverage testing. You even said above that "410b is always invoked..."

Technically, no, using 12-month elapsed time for FT employees and 1 YOS (1000 hours) for PT employees doesn't automatically create a 410(b) coverage failure.  But the design establishes separate eligibility conditions for different employee classifications so the matching contributions would need to satisfy 410(b) coverage testing, and the differing eligible rules could create a coverage issue if they disproportionately delay or excludes NHCEs. The IRS would question first if FT and PT are reasonable classifications with object criteria (presumably, year) but then does the classification create a coverage problem.  If full-time employees contain a disproportionate number of HCEs, the design could raise discrimination concerns. The issue is whether the distinction creates a coverage problem.  If the PT group disproportionately consists of NHCEs (which is often the case), a larger percentage of NHCEs than HCEs could be excluded during a given year.  Then your matching contribution component would have to satisfy §410(b).  The coverage test would look at the benefiting employees for the match, not just the entire plan.  I mean why is this being done? Is this a way to get around the LTPT employee rule under the SECURE Acts?