furloughs

Plan has a last day requirement for employer contributions.  If an employee is on furlough should that employee be treated as terminated for purposes of contribution accrual?

Thanks of any guidance.

Are they terminated or just on leave? That is are they expect back? If they are expected back I don't see how you can treat them as terminated.

Isn't this a question only the employer can answer?

Are they saying this person is terminated or not? 

I don't see how a TPA can answer this kind of question.   There are signs that can point one way or another but I would not claim they are full proof in determining if the person is terminated or not.  But as a general rule they have to give COBRA notices to terminated employees.  Have they given such notices or not?  I am not sure how unemployment works but are these people reported as terminated for those purposes?  

Once again these are all something the employer needs to tell you and it isn't determined by pension law.  

But at least for "pension law", the application of the employer's interpretation should be consistent for all cases.

14 minutes ago, ESOP Guy said:

Isn't this a question only the employer can answer?

Are they saying this person is terminated or not?  

I don't see how a TPA can answer this kind of question.   There are signs that can point one way or another but I would not claim they are full proof in determining if the person is terminated or not.  But as a general rule they have to give COBRA notices to terminated employees.  Have they given such notices or not?  I am not sure how unemployment works but are these people reported as terminated for those purposes?  

Once again these are all something the employer needs to tell you and it isn't determined by pension law.  

We aren't determining.  They've asked us for guidance.  If I could find some written guidance I was going to point them to it.  My inclination was that it probably not a termination if there is a definitive expectation that such employees will return.

Most of the written guidance of which I am aware deals with unemployment benefits, health and welfare benefits, etc.  Haven't really found anything on 401(k) plans.  The only discussions I found dealt with distributions and 5500s those threads generally indicated that such employees would be treated as terminated although no cites (or even aby real reasoning) was provided.

Anyway thanks for the responses.

19 hours ago, R. Butler said:

We aren't determining.  They've asked us for guidance.  If I could find some written guidance I was going to point them to it.  My inclination was that it probably not a termination if there is a definitive expectation that such employees will return.

Most of the written guidance of which I am aware deals with unemployment benefits, health and welfare benefits, etc.  Haven't really found anything on 401(k) plans.  The only discussions I found dealt with distributions and 5500s those threads generally indicated that such employees would be treated as terminated although no cites (or even aby real reasoning) was provided.

 

Anyway thanks for the responses.

 

An employee who is on furlough (or laid off) is NOT terminated.  The problem is that employers will sometimes say than an employee is "laid off" to avoid saying they are terminated.  This is a problem and I often have to challenge employers on the issue.  Some basic questions: is the job being held open pending the employee's return?  Is the employee expected to come back (similar to a maternity leave)?  Are you continuing benefits for the employee or have you provided COBRA benefits? etc.. It is a facts and circumstances determination and the words furlough, laid off, leave of absence, are too often used without really explaining what the situation is.  Are they still employed? That is the question that has to be answered, and it isn't always straightforward.