Assuming the 401(a)(26) and 410(b) are satisfied and, if applicable, top heavy accruals provided, can a DB plan have a "last day employment" to accrue a benefit (other than the Top Heavy) under the plan formula?

I have never seen it yet but that doesn't mean it is impermissible.

No.

Need more than that - such as why and where is it prohibited?

The fact that you haven't seen it is a pretty good indication that it isn't allowable. But if you need more, try 411(b)(4)(D). The reg cite is 1.411(b)-1(f) [which, incidentally, indicates that the provisions are not applicable to DC plans], and that points you to DOL regulations under 2530. See 2530.204-1. But the whole of 2520 and 2530 are indeed a wonder to behold. I think you'll find that an accrual must be provided for anybody that works at least 1000 hours. See 2530.204-2©. There can be a higher threshold for full accrual (such as 1800 hours). Hence a plan can be designed so that if somebody works precisely 1000 hours they can receive an accrual of something like 1000/1800 of the "full" accrual for the year. However, if that is done, then compensation has to be annualized. See 2530.204-2(d). Hence, pro-ration just isn't done in many plans. 'Nuff?

Isnt the requirement for partial year benefit accrual a required provision in the plan document for qualification under 401(a)?

I will have to say that I have never considered a DOL reg as "a wonder to behold".

mbozek,

Not if you give a full year for 1000 hours (under 1000 hours gives nothing, even if they terminate in a year when they would have worked full time if they stayed). If you use a higher threshold for a full year, then you must give partial year accrual.

But doesnt that state compliance with the rule, e.g. the employee gets accrual credit for completion of at least 1000 hrs. of svc? It is still in the plan document.

I misunderstood your initial comment. Absolutely -- just how the partial year works must be spelled out in the plan document.

Just to address a point that this discussion raised in our offices. ERISA service rules and Code section 411 do not apply to a church or government sponsored plan; therefore, a last day of plan year requirement can be used for this limited group of DB plans.