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403(b) Continued Participation - how to calculate?
Benefits & Compensation
403(b) Continued Participation - how to calculate?
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403(b) administrators - Once an employee is a participant in a plan and contributing and receiving match, can the Plan use a look-back year for counting hours for continued eligibility year after year
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Forums » Topic Forums » Benefits & Compensation » 403(b) Continued Participation - how to calculate?
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403(b) Continued Participation - how to calculate?
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403(b) Continued Participation - how to calculate?
posted at 10/2/2009 6:07 AM EDT
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Posts: 42
First: 7/13/2005 Last: 8/5/2011 |
403(b) administrators - Once an employee is a participant in a plan and contributing and receiving match, can the Plan use a look-back year for counting hours for continued eligibility year after year, or must we assume the employee will work the required # of hours through his current schedule?
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403(b) Continued Participation - how to calculate?
posted at 10/2/2009 7:08 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
There is something I am finding called an "universal availability requirement"..that is defined more here:
http://www.segalsibson.com/publications/bulletins/oct07403b.pdf That document makes it seem like you have to look at both prior year AND forecast the current year. That is, if they meet either requirement, they are eligible. Honestly, I would clear this question with the third party administrator or whoever helped write your plan document that was required to be done by 1/1/09. They should have defined eligibility within the plan document. (One thing to note on 401k's is that once eligible, always eligible. I am not sure that is the same in 403b's but you might ask your TPA). |
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403(b) Continued Participation - how to calculate?
posted at 10/2/2009 7:21 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Richard,
You might also take a peek at : http://benefitslink.com/boards/index.php?showtopic=41645 and http://benefitslink.com/boards/index.php?showtopic=40087&st=0 And it also gets into ERISA vs NonERISA plans -- if you have an ERISA covered 403(b), then the employee(s) would get the better of the two rules. And in ERISA plans, the employees can NOT lose eligibility once it is gained. One point made in those two sets of postings is WHY would an employer want to exclude this group -- especially if most PT employees are known to not participate? There is no nondiscrimination test to be passed. And the best quote I found "I agree with Sieve that under ERISA, once you work 1,000 hours in a year, you would participate going forward. But, under the regs, the <20 hours per week determination for year 3 is based on hours worked in year 2. Suppose someone worked full time in year 1 and went to 10 hrs/week at the start of year 2. Under the regs, he would be deferral eligible for year 1 since he is expected to work 1,000 hours in year 1, eligible for year 2 since he worked 1,000 hours in year 1 and ineligible in year 3, since he worked < 1,000 hours in year 2. ERISA would make him eligible to defer in year 3. But, the regs also say that if one <20 hours person is allowed to defer, then all < 20 hours people must be eligible. We would have someone who could be excluded under 1.403(b)-5(b)(4)(ii)(E), who is eligible because of ERISA reguirements. It looks like that would mean this ERISA covered 403(b) would no longer be able to use the <20 hours exclusion...." BTW, I highly recommend the BenefitsLink forums for anyone highly involved in benefits planning! |
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