We have taken over a Plan that currently uses the Elapsed Time method of crediting hours of service. Our document, however, only allows for acutal or the equivelancy method. what if any would the impact be of swithing the plan over to the actual method mid plan year? Should something like this be done at the start of the Plan Year?

I seem to recall that the elapsed time regulations provide some specific rules as to how to handle this situation.

See DOl Reg. Section 2530.200b-9(f) and (g). Essentially, when the plan is amended to the computation period method, participants should receive credit for all of their prior one-year periods of service, plus (A) hours of service for any fractional year existing as of the date of the amendment calculated using an equivalency chosen by the plan administrator, plus (B) hours from the date of the change through the end of the plan year in which the amendment was made. (They would get an additional year of service if A + B equal 1,000 or more.) If you make the change effective as of the beginning of a plan year, (B) might not have a value.

Say it ain't so....
Hypo: My date of hire is 1/2/98
My plan year end 12/31
I transferred from a class under elapsed time vesting to a class under computation period vesting on 1/1/01.
I get two years of service for vesting from 1/2/98 to 1/2/00.
Since I switched on 1/1/01, I do not get credit for a year of service from 1/2/00 to 12/31/00, even though I worked for 365 days in the leap year?
Is this how Reg. 1.410(a)-7(f) is applied?