An employee works for both company A and B, members of the same affiliated service group. The only plan in the ASG is a DB plan that has a 1,000 hr. requirement for accruals. The employee had over 1,000 hrs. with co. A and less than 500 hrs. for co. B. The plan defines compensation as using the 415 safe harbor definition. Is it correct to only use co. A's compensation for plan purposes?

The answer would be no, in my opinion. Since A and B are members of an ASG, they are treated as a single employer, and you must consider compensation from both A and B. Any exclusion of compensation would have to satisfy non-discrimination rules. Also, by the same reasoning, in determining eligibility and vesting you must total hours from both A and B for ees who were employed by both.