Full time participant (age 64) in a calendar year PS plan converts to part time in mid 2008. Total hours in 2008 are 800 so there is not a break in service. Rate of work in 2009 is about 400 hours and he no longer receives benefits. No distributable event since he has not been terminated from service. Does the change in hours make him eligible for a distribution of his account now? Or would working under 501 hours in 2009 make him eligible as of 1/1/10? Or is he simply not eligible until actual termination? Thank you.

He is still a participant in the plan; he just does not qualify for the contribution. As you said, there has been no distributable event, so I would say "no" to the distribution question.

... but you can create a distributable event pretty easily.

I think David means you can either fire the guy or add inservice distribution option at age 64. Most PS plans allow inservice at age 65 anyway.

I was not being so blunt. Those are the most obvious of the options that can be used.
If the EE is closing in on (or already passed) NRD, the easiest solution is to make sure the plan permits in-service distributions at NRD.