An employee went on workers' compensation during February of 1998. The plan provides that only employees actively employed on December 31, 1998 are entitled to receive an allocation. Is the employee entitled to receive a proportionate share of the employer profit sharing allocation?

My initial thought is provided the employee has not officially terminated employment he is eligible to receive a share of the employer profit sharing allocation. That contribution would, however, only be based on the compensation received by the employee prior to the date he went out on workers' compensation.

Any thoughts?

Sounds logical. Does the plan document define "termination of employment"?

Your plan document should define what happens in this situation. If the plan document is ambiguous, then I would consult a pension lawyer. Good luck!

Also, your plan document will have an hour of service definition which may add something to the analysis. I am thinking about how plans don't have to include hours of service in excess of 500 hours for periods where the participant wasn't in active employment. For example, your plan might limit allocations to participants with 1000 hours during the plan year. Also, perhaps, the administrator could consider this language pertinent in his interpretation of an otherwise ambiguous plan document.