Military Service

USERRA is very clear about the make-up rules, coverage/nondiscrimination/deduction/etc. issues for make-up contributions upon qualified reemployment.

What about the year the employee leaves for qualified military service? Example, active participant in a Profit Sharing plan that has a 1,000/last day requirement. Participant leaves for qualified military service in July 2019, having worked 800 hours. So this person does not get an allocation of profit sharing contribution for 2019.

I can't find any dispensation for coverage/nondiscrimination testing for the year the individual terminates employment for qualified military service. However, it "feels" wrong to include this person, to the detriment of testing results. Do you include such an individual in the testing, or just toss them out altogether for 2019? My heart says to toss them out, but my head isn't agreeing.

Interested in any thoughts you might have. Thanks.

Bump

I am not aware of a specific rule about your question.  But consider this reasoning:

If, after the military service, the participant returns to work and qualifies for a makeup nonelective contribution, it is determined on the would-have-been as if she had been actively at work.  The makeup contribution does not count against nondiscrimination measures for the year in which the makeup contribution is made.

To allow relief also in the leaving-for-military year would count the same benefit accrual twice.

I understand this introduces some distortion in measures for the leaving-for-military year.  But perhaps that’s a cost of needing rules that can’t wait for knowing whether the participant completes the military service, returns to work, and qualifies for the makeup contribution.  Consider what would be in the 2019 tests if the participant does not return after the military service.

Thanks Peter. Food for thought! I guess (unless I'm missing something) that there is in fact already a specific rule - coverage/nondiscrimination testing would include such a person, UNLESS there is a specific exception. And I can't find one.