A plan provides that if a participant completes 500 hours in a PLan Year (4/1 - 3/31) such participant shall receive one year of credited service for accrual purposes. It is an all or nothing situation.

The plan sponsor merges with another company and the plan year is changed as follows:

4/1/06 - 3/31/07

4/1/07 - 6/30/07

7/1/07 - 6/30/08 and so on

So there is one plan year that is only 3 months during the transition.

An employee completes 500 hours during the period 4/1/07 - 6/30/07. Any reason why such employee cannot receive the one year of credited service for accrual purposes? Or does anyone know of a regulation that addresses this situation directly or by means of an example?

Thank you.

29 CFR 2530.204-2

I looked closer at the regulation.

It seems for the 3 month short computation period, if an employee works the requisite 500 hours such participant should receive at least 0.25 years of service credit for accrual purposes. However, it seems perfectly acceptable to provide one full year of service credit for such three month period.

Does my interpretation make sense?

Thanks.