Plan has semi-annual entry dates (1/1 and 7/1), and a 1 year of service (1000 hrs) requirement. Entry date is following or coincident with satifying the requirements.

If a person was hired on January 2, 2009 and worked more than 1000 hrs in 2009, when would she enter the plan?

I would contend that the one year of service is satisfied on Jan 1, which is coincident with an entry date. Is that correct?

this depends on what type of logic you are using.

Relius has a check box "Waiting period exclusive" to handle either case. I'm not sure if there is any hard and fast rule.

(you realize of course your post is 10,004 for the 401(k) board. you just missed the grand prize for being 10,000, whatever it was - benefits link has come a long way - a big thanks to Dave Baker)

We've always taken the view that since January 1 is not a business day for our clients, anyone who begins working on January 2 has a presumed hire date of January 1.

Do you also presume they accrue hours for Jan 1, the non-business day?

This is (probably) an administrative interpretation. (Reasonable, IMHO.) Just make sure you are consistent, and non-discriminatory.

You mean I can't allow the owner's daughter in on Jan 1 and keep the Yankee fan out until July 1?

BG -- Sure you can. That's not discrimination--that's just justice!

FWIW, I've never heard of back-dating an employee's date of hire to the day of a holiday just because it's not a buisness day. Does that mean someone who starts work on Monday, July 2 is deemed to have a date of hire of 7/1? That makes no sense to me. Your DOH ought to be when you begin earning hours of service credit or begin earning your salary, but not before.

But, is a Y/S complete on the day before the 1st anniversary of date of hire, or on the 1st anniversary itself? I think it is the former since, for eligibility purposes, the second year is measured from the 1st anniversary of the employment commencement date--which means, if logic is worth anything dealing with ERISA/Code, that the first computation period ended on the day before the 1st anniversary. (DOL Reg. Section 2530.202-2(b).) So, a Jan. 2 hire completes 1 y/s on Jan 1 of the next year, without a need to produce an artificial Jan 1 DOH.

I've never thought about that before. But if the OP comes to the same conclusion with a better articulated reason, does it matter?

I respect Larry's logic and David's call for consistency.

I like k2retire's work-around.

I suppose the Boys and Girls at Corbel think, as Tom pointed out, there's no hard and fast rule, as they've programmed Relius so it can be used either way.

And I like this thread. Thanks, BG5150.

I'd be careful about assuming either way is correct for a particular client. This is a 401(k) Plan if an employee was eligible on a particular entry date, then the employer needs to have offered the Plan to them on that date. If you're running everything assuming they're in on January 1 and the employer doesn't offer the Plan until July 1 you're creating problems for them (Match, comp. while a participant, ability to defer, etc.). I'd consult with employers individually in this situation to see how they handled that particular employee in terms of eligibility and note the treatment to make sure that there is consistent treatment in the future for any other employees that they have in that situation.

I've always thought it was pretty cut-and dry and dependent on whether or not the word "coincident" is used. If the language says " employee becomes a participant on the entry date COINCIDENT with or next following satisfying eligibility", then:
365 days from January 1, 2009 and is January 1, 2010 (non-leapyear). This, of course is COINCIDENT with an entry date and therefore, this is when they come in.

Some documents simply say "employee becomes a participant on the entry date next following satisfying eligibility" SO:
365 days from January 2 and is January 1. The plan entry date NEXT FOLLOWING the date eligibility is satisfied is July 1!!

I've always found it hard to believe that every attorney in the couintry is drafting eligibility that leaves any room for interpretation.

Hey, Austin,

'Pretty cut-and-dry' or 'every attorney in the country is drafting eligibility that leaves room left for interpretation'? Hmmm. I go for pretty cut-and-dry.

Actually, IRC § 410(a)(12-month period shall be made with reference to the date on which the employee's employment commenced. So too DoL Reg § 2530.202-2(a), as Sieve pointed out. Thus, the first eligibility year of service measurement period does not end on the anniversary of the day the person commences employment, but on the day before.

You count from the first day the person is credited with hours for services performed. Rev Rul 76-250, 1976-2 CB 124; Budwig v Natelson's Inc. Profit Sharing Retirement Plan, 720 F2d 977 (8th Cir 1983). So k2retire might be getting to the right place, but not because k2retire treats Jan 1 as the employee's employment commencement date for a Jan 2 hire, but because the Jan 2 hire's initial 12-months concludes the next Jan 1.

As Austin points out, ya gotta look to see if the plan calls for coincident or next, or just next, entry.

Austin did make me look, though, at my self-authored prototype and model for individually designed plan documents. No ambiguity--they both mimic the regulation. It's the day before the first anniversary that the first measurement period ends. I suspect that most of the other plans drafted by attorneys are like that too.

the fact Relius has an option for inclusive logic has nothing , as far as I know, to do with an opinion by Corbel.
the logic is a carry over from the old Pentabs system which was there before Pentabs was purchased by Corbel.

That being said, if I were to ask you hopw many numbers are between 1 and 3 what would your answer be? Or would you ask for further information, such as "Including or excluding 1 and 3"
So when does someone hired Jan 2 complete 12 months? is it at the end of the day on Jan 1, so they would enter the following entry day or on that day itself - in other words -retroactive to the start of the day?

I still think it boils to an administrators view, and being consistent, etc. I don't believe I've ever seen an IRS opinion on the matter

So are we in agreement?

You could interpret being hired on Jan 2, the year of service would be satisfied on Jan 1. And if the entry dates are "coincident with," then the person enters Jan 1. Absent of the "coincident" phrase, it would be July 1 (or the next date available under the plan.

However, we should check with the employer to make sure how it was done and it was done consisitently.



BTW: what setting in Relius would yield a DOH of 1/2 would result in entry on 1/1 the next year?

Infinity.

To this observer, it seems inappropriate to decide this interpretation question based on the flexibility (or lack thereof) in how the software handles it, or that the TPA might be trying to decide without input of the plan sponsor.

I was just trying to make sure that a DOH of 1/2 and a plan entry of 1/1 (the next year) would be okay.

The plan sponsor only has one person whose DOH is even near one of the entry dates, and so far, has not had to address the situation.

With respect to how it was handled in the past, the fact that it was done wrong 3 years ago is no reason to do it wrong again.

It seems like MOST people seem to agree that hired on 1/2/09 = plan entry on 1/1/2010. I just can't find an explanation for making them wait until 7/1 (assuming the coincident language is in ther...

I agree with austin3515.