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Posted

Have a plan that is wanting to change their fiscal year end from 6/30 to 9/30 and I have a question about entry dates.  1 year, 1000 hours service and semi entry (7/1 and 1/1) are eligibility requirements.  (Entry dates will change to  4/1 and 10/1)

I understand that eligibility computation periods are created from 7/1/2019 to 6/30/2020  and 10/1/2019 to 9/30/2020 because of the short plan year. 

I understand that the plan may not use the short plan year as the computation period and prorate the hours of service requirement, unless the overlapping period alternative is provided to employee who cannot satisfy the proration requirement.  This alternative is not the subject of my question at this point, but I know it's available if employer would like to go that route.

1.  Employee A has been excluded from the plan for several years because he could not satisfy the 1000 hours requirement.  He is on the 1000 hours watch from plan year to plan year.  However, the employee went full time May 2019 and is expected to satisfy the 1000 hours requirement during 7/1/2019 to 6/30/2020.    If there was no plan year end change, the employee would be eligible 7/1/2020.  It doesn't seem right to me that the employee have an entry date of 10/1/2020.  Is there an implied entry date of 7/1/2020 still because of the eligibility computation period of 7/1/2019 to 6/30/2020? 

I'm missing something.....

2.  What pitfalls should I be conscious of?

Posted

The short year is 7/1/19 - 9/30/19?  I think you're ok.  (Actually I think your eligibility computation periods are the 12 month years ending 6/30/19, 9/30/19, and then each 9/30 thereafter.)  Yes his entry is delayed a bit versus the scenario without the change, but so be it; he never actually had any rights as a plan participant so you haven't taken anything away from him.  For some reason a case with the name "North Shore Auto" has stuck in my mind - the sponsor kept changing the goalposts for eligibility with several amendments, but it was ok because the participant had never actually entered the plan (even though he had satisfied eligibility - I think).

McGath v North Shore Auto, fwiw (added by edit)

Ed Snyder

Posted

I am a bit confused on the data. you indicated they are wanting to make a change, so I guess it hasn't taken place yet.

you noted the person will work 1000 hours for the period 7/1/2019 - 6/30/2020, and would normally enter 7/1/2020. you indicated dates would change to 4/1 and 10/1. so does that mean the short year will be 7/1/2019 - 3/31/2020 and the person won't have worked 1000 in a 12 month period preceding that date?

Posted

Sorry on the confusion....

The change has not taken place yet....but.

The short plan year will be 7/1/2019 to 9/30/2019.

The EOB version 2013 had an example that said the eligibility comp period would be from the beginning of the plan year 7/1/2019 to 6/30/2020.  And another eligibility comp period from the beginning of the plan year 10/1/2019 to 9/30/2020.

The employee in question was hoping that he would somehow become eligible to participate quicker because he became full time May 2019 and would complete 1000 hours of service coupled with the plan adding a short plan year.  I just don't think that will be the case. 

My question is when would the employee become eligible for the plan? 

I'm leaning towards 10/1/2020, but am not sure and can't prove it.

Posted
1 hour ago, Mr Bagwell said:

The EOB version 2013 had an example that said the eligibility comp period would be from the beginning of the plan year 7/1/2019 to 6/30/2020.  And another eligibility comp period from the beginning of the plan year 10/1/2019 to 9/30/2020.

I didn't do any research when I opined above that the elig periods were based on years ending, and I'll assume the EOB is correct.  Still, I don't think it matters that there used to be an entry date on July 1.  It's a two part determination - satisfied eligibility on 6/30/20?  Yes.  Next entry date?  10/1/2020.

Ed Snyder

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