Otherwise Excludable Employees on ADP Test

I have a plan with 5,000 plus EEs in it.  The previous admin put it into Relius years ago, then took it out and did everything manually for the past few years.  I have been working for months getting it back into Relius.  Plan eligibility is 21/1 M.O.S./monthly entry dates. 

When I run the ADP test, Relius is not agreeing with my excludable EEs and I wonder if it's because the complete history is not in Relius.  Relius is excluding 300 plus people I think should be on the test. For example, one person has a date of hire of 5/15/2016. Date of term is 8/7/2017.  Did not work 1000 hours in 2016 or 2017.  Is that why Relius is excluding them?

But then, I have someone who hired on 5/16/2016, and worked 930 hours in 2016 and 1,000 plus 2017 and term'd  after July  2017 it's excluding them as well. 

Third example, someone hired on 5/16/2016 and worked 1000 hours in 2016 and 2017 and term'd after July 2017 and they are excluded.

I might be getting confused with this because it's such a huge plan. Not sure if I should just go with what Relius is spitting out or change 300 people to be on the test ...

Thanks!! 

Assuming you have your plan coded to use the maximum period of time and entry date to calculate otherwise excludable, it appears Relius is correct.

For your first example, EE hired 5/15/2016.  This person could enter the plan as late as 11/15/2017.  (Earlier of first day of the next plan year after attaining age 21 and 1 year of service(1/1/2018) or 6 months after meeting these requirements (11/15/2017)).  I assumed a calendar year plan year.  Since they terminated before that date, they are considered otherwise excludable.  Again, assuming that is how you have/want it coded.

Mike

Thanks Mike!

12 minutes ago, NJ Mike said:

Assuming you have your plan coded to use the maximum period of time and entry date to calculate otherwise excludable, it appears Relius is correct.

For your first example, EE hired 5/15/2016.  This person could enter the plan as late as 11/15/2017.  (Earlier of first day of the next plan year after attaining age 21 and 1 year of service(1/1/2018) or 6 months after meeting these requirements (11/15/2017)).  I assumed a calendar year plan year.  Since they terminated before that date, they are considered otherwise excludable.  Again, assuming that is how you have/want it coded.

Mike

 

This might help.

Thank you ESOP Guy!

this is an area for years it was 'argued' when determining otherwise excludables you also had to consider plan entry dates. a few years ago the IRS issued a memorandum indicating a reasonable interpretation of 'maximum' exclusion would be, for all practical purposes 1st day of plan year or 18 months. we are all so used to plans with 2 entry dates (e.g. 1/1 and 7/1)

but a plan could have entry dates after completing 1 year of service of first day of pan year or 6 months after 1 year of service, so someone who quits before that period could be excluded. I think I have actually seen a plan written that way!

anyone, the attachment is the memorandum

in Relius, you could still use plan entry dates  

plan specs/ processing / transaction settings / eligibility

and there is a field you can set to either statutory entry dates or plan entry dates

otherwise excludables.pdf

Relius does not look at the hours per se.  What drives the the YOS criterion for testing is the Years of Service data element.  You can have someone credited with 1,000 hours for 5 different plan years, but if the Years of Service on the Service tab is zero, then that person will be (considered) excludable.

The flip side is true, too.  If a person never had 1,000 hours entered for any plan years, but the Years of Service field is at least 1, then the person will not be considered excludable.

Thanks everyone!

On 5/14/2018 at 6:00 PM, BG5150 said:

Relius does not look at the hours per se.  What drives the the YOS criterion for testing is the Years of Service data element.  You can have someone credited with 1,000 hours for 5 different plan years, but if the Years of Service on the Service tab is zero, then that person will be (considered) excludable.

The flip side is true, too.  If a person never had 1,000 hours entered for any plan years, but the Years of Service field is at least 1, then the person will not be considered excludable.

If a person completed 21 age, 18 months of service couple of years back, but not completed 1000 hours in any of the years, should this participant excluded under Otherwise Excludable (statutory exclusion) ?

A plan could have a 1 year (1000 hour) wait.

Therefore, if a person has entered the plan because the plan is more lenient in its eligibility requirements but could have been excluded if the plan had a 1 year wait, then that person is otherwise excludable (unless the person is an HCE and you choose to exercise that option for ADP testing)

On 2/7/2019 at 5:57 PM, Tom Poje said:

A plan could have a 1 year (1000 hour) wait.

Therefore, if a person has entered the plan because the plan is more lenient in its eligibility requirements but could have been excluded if the plan had a 1 year wait, then that person is otherwise excludable (unless the person is an HCE and you choose to exercise that option for ADP testing)

If my understanding is correct, you mean to say if a plan has less than 12 eligibility requirement and no hours requirement, then no need to check for 1000 hours for Otherwise excludable, only we can check for 18 months of service?

just to be clear, lets say there is no hours requirement. someone could have been hired 5 years ago who has never worked 1000 hours. they would have worked over 18 months, but would still be otherwise excludable  because the plan could have had 1 yr/1000 hour requirement

Again, though, Relius keys off of the Years of Service field.  You can have someone who has a dozen years with over 1,000 hours in the Historical Compensation fields, but Zero in Service on the Service tab, Relius will make them excludable.

If you ever have someone you think should/should not be excludable and you are finding opposite results, check that service field.  The report that spits out with the excludables is handy when someone is being excluded and you think they shouldn't be.

what may happen on Relius:

ee terminated and paid out and you delete him from the system

he gets rehired and he will reappear, but prior service is not restored. if you look under historical comp you should be able to find how many prior years of service they had.