The plan sponsor under a very old PLR (8031091) appears to be required to count hours of service for the time periods that are the basis for severance pay.

If a participant is terminated during the plan year with 800 hours, but receives severance pay for 3 months, is the plan required to count those hours of service (for vesting) which are represented by that severance pay?

In this case, a participant wants extra hours to be counted to improve their vesting in the plan.

Okay, I know a private letter ruling is only applicable to the party making the request. Thus nobody else can be bound by a PLR, nor can anybody else rely on a PLR, only the party making the request gets that benefit.

This PLR (from a request made in 1978) indicates that hours of service may be required to be counted, indicating that the “nature of the payment in regard to the employee’s employment relationship” is a significant determining factor. They further explain that “if the payment is made on account of an employment relationship for which compensation was paid then hours of service must be counted…”, which means the IRS answer is directly related to actual facts and circumstances for the specific sponsor addressed by the private letter ruling.

However, nowadays, under the Final 415 regulations, severance pay is not included by the plan. Is it safe to say that "by association" Hours of Service for the periods of severance are also excluded? Is that going too far out on a limb?