Start Date/Term Date

What is the definition of start date for eligibility in the 401k? Is it first day worked? First day paid?

I have client that uses a sign-on bonus and pays it at signing. Does this begin the count-down for eligibility? Or can they still use first day worked?

And the reverse: what is the definition of a termination date? Last day worked or last day paid? A participant who terminates on 12/28/2017, but his last paycheck in in January 2018. What is his termination date? Is he eligible for 2017 contributions with a last-day requirement?

It begins on his first day of employment and termination is last day of employment. The sign-on bonus does not start the clock nor does receipt of last payment signal the last day.  

There is some debate on last day if 12/31/17 falls on a weekend (which it did) and he was regularly scheduled to work Monday through Friday and ended 12/29.  In your example, he terminated employment in 12/28, so last day should not apply.

Is a sign-on bonus 401k-eligible (assuming it's paid after their start date)? Or is it like severance pay - ineligible because it is paid for reasons other than normal service. 

401king: The sign-on bonus is reported as W2 wages paid prior to the first day worked. In this case, it's not 401k eligible because the service requirement is one year. The start date is what I'm trying to establish.

Madison71: Are you saying that when compensation is paid has no bearing on DOH or DOT?

I’m saying that the start date is the employment commencement date which is the date the employee first completes an hour of service for the employer.  The termination date is the date the employee has experienced a bona fide termination of employment.

Madison71: I would like to use that definition! Do you have anything to reference it?

What about when a participant who has a last-day-worked of 12/28/17, but his final paycheck falls on 1/5/18 and he has deferrals and a matching allocation. That's going to mean it needs to be included in the ADP/ACP testing. Isn't he considered benefiting in 2018?

Not at the moment.  You should be able find similar language in the plan document in eligibility for participation.  

Normally, hire date and "service" are usually defined as when you've worked an hour of service as defined by the plan.  The hire date, in that case, would be the beginning of the first day worked.  For termination, it would normally be the end of the day the last hour worked occurred. 

We once had to argue with a client that used SAP (german) that the termination date was the last day worked and NOT the first day NOT worked.  We had the same issue with date of death -- they apparently use the first day FULLY dead.  That was a crazy conversation!

As opposed to the first day they were only PARTIALLY dead.

Miracle Max the Wizard: He's only mostly dead. If he were all dead, there's only one thing you can do.