6 month eligibility

I have a client that has a 6 month 498 hours wait for deferral and 6 month 1,000 hours wait for profit sharing, with quarterly entry. My question is: If a participant does not satisfy the required number of hours in the first 6 months, on what basis do you continue to track the hours before they are allowed into the plan?

I believe that you continue to track it quarterly until the end of the plan year, and if they do not satisfy the hours requirement by then, they essentially start over next plan year and as soon as they hit the required hours they are let into the plan on the following quarterly entry date. 

Am I looking at this incorrectly?

That sounds off, the "X hours in Y months" provision is usually written as the employee's FIRST Y months of employment.  Plan language would dictate, of course. 

Does the "498 in 6 months" have fallback language to make sure someone with 1000 hours in their 12 months gets swept in?

Since the plan uses hours rules, the plan has to allow an employee (not in an excluded classification) to participate if the employee works at least 1000 hours in their eligibility computation period (commonly first 12 months of employment) - a provision commonly defined as the One Year of Service eligibility rule (1Yos). This applies to both deferrals and profit sharing.  

For deferrals, an employee working 498 hours in 6 months would be eligible earlier than they would be under the 1Yos rule.  The plan document would have to specify in this rule is applicable solely to the first 6 months of employment, or if it applies to a rolling 6 month period.

For profit sharing, an employee working 1000 hours in 6 month would be eligible earlier than they would be under the 1Yos rule.  Again, the plan document would have to specify how the 6 months are administered.

6 minutes ago, Paul I said:

Since the plan uses hours rules, the plan has to allow an employee (not in an excluded classification) to participate if the employee works at least 1000 hours in their eligibility computation period (commonly first 12 months of employment) - a provision commonly defined as the One Year of Service eligibility rule (1Yos). This applies to both deferrals and profit sharing.  

For deferrals, an employee working 498 hours in 6 months would be eligible earlier than they would be under the 1Yos rule.  The plan document would have to specify in this rule is applicable solely to the first 6 months of employment, or if it applies to a rolling 6 month period.

For profit sharing, an employee working 1000 hours in 6 month would be eligible earlier than they would be under the 1Yos rule.  Again, the plan document would have to specify how the 6 months are administered.

This is what the document says. I assume this means if they have not completed the eligibility requirements by their anniversary date it switches to calendar year. 

The Plan defines "month of service" as a calendar month in which you complete at least 83 hours of
service. Furthermore, the Plan defines "year of service" as a 12-month period in which you work at
least 1,000 hours of service for the Employer. The first eligibility service period starts on your first
day of employment with the Employer. For example, if you begin work on February 15, work 80
hours in February, and work at least 83 hours in each of the months of March through August, you
would enter the Plan on October 1. If you did not complete six months of service by the following
February 14 but did complete 1,000 hours of service by that date, then you would enter the Plan on
the April 1 immediately following the completion of the one year of service.

The text does not say the months have to be consecutive.  If so, then look at count any month in which the employee works 83 hours as one month.  The employee will enter the plan on the entry date after their total number of months equals six months.  It also appears that the count of months resets with the start of a new plan year.

I note that the text is merely an example and does not cover all of the details surrounding statutory eligibility rules.  I suspect the text is from a Summary Plan Description and not from the formal Plan Document.  If so, you should ask the Plan Administrator for a copy of the Plan Document (name and contact information is in the SPD).