Must a defined benefit plan using elapsed time credit a terminating employee with benefit and vesting service credit for period beyond his termination date represented by the amount of accrued vacation paid upon termination of employment?

I wouldn't think so. The elapsed time method is not based on hours for which you are paid, but simply on time while employed. If the employee is terminated, that should be the severance from service date and the fact that accrued vacation is owed does not extend the employee's last day worked to some time in the future. So, I think unless the employee comes back within the next 12 months, his vesting service is cut off at the actual date of termination. Does anybody disagree with this?