Unit 6: Eligibilty Flashcards
What’s six steps should be undertaken to determine eligibility?
1: identify requirements
2: accumulate data
- Determine age
4 determined service
5 determine eligible categories
6 determine entry dates
There are two computation periods for initial eligibility what are they?
Up to 12 months and 1000 hours from date of hire for period one.
For period two From plan year start date.
What is the counting hours method of determining eligibility?
Are vacation hours counted?
Employee gets credit for hours worked and the employee gets credit for hours entitled such as vacation
If using the counting hours method can an employer require less than 1000 hours worked?
Absolutely
What is the equivalency method when determining service eligibility?
The employer sets a preset number for time worked such as one week = 45 hrs Or semi monthly equals 95 hours.
What is the elapsed time method as it pertains to determining service eligibility?
The document sets a preet time frame such as six months. This method does not count or consider hours so extreme part time employees can become eligible.
Are part-time employees allowed to be excluded from the 401(k)?
No they are not.
How does the secure act allow part-time employees to become eligible?
Three years of consecutive employment of 500 hours a year or greater by an employee will equal eligibility.
If the plans document states that an employee must work 12 months in 1000 hours and an employee who is truly part-time working 500 hours a year for a three-year period ends up becoming eligible, what happens?
The part-time employee will become eligible to defer their own funds into the 401(k).
However the employee must still satisfy the documents requirements for any employer contributions including match.
Are employers allowed to exclude certain job type such as truck drivers from the 401(k)?
Yes they can- except the plan must satisfy coverage requirements
Give three examples of excludable employees: and what must the plan do?
By geographic location
By job description
By division
*** The plan must pass nondiscrimination coverage testing
What are the three types of enrollment?
One: automatic enrollment
Two: affirmative enrollment
Three: special enrollments such as dual eligibility
What is dual eligibility? (2 examples)
A plan sponsor can set different eligibility requirements for different types of employees or different types of contribution sources.
For example: waive up option/grandfather clause; that makes existing employees eligible, but new employees have to go through regular eligibility requirements.
For example: employee deferral‘s may be allowed on date of hire for example but match eligibility requires 12 months in 1000 hours worked.
Are adjustments to eligibility allowed that increase the requirements?
Yes. Employers can increase eligibility. They may increase it for all employees or just newly hired employees.
Under what 2 conditions can a plan sponsor exclude employees that were previously eligible?
If there is a change in:
job classification
location
these could move the employee from eligible status to an ineligible status. If the new classification or location is already ineligible.
How is a break in service defined under the counting hours rules?
When an employee works less than 501 Hours in 12 consecutive months
How is a break-in service defined under elapsed service rules?
Not being employed for 12 months
How do plans that don’t utilize break in service provisions handle the rehiring of employees for Plan entry? (3 conditions)
1: if an employee had previously met eligibility whether participated or not, then they are eligible.
2: if employee had met the eligibility requirements but had not met the entry date, the employee may enter on the next entry date
Numeral three: if an employee had not met eligibility before, then the employee must start all over.
What does USERRA stand for?
Uniformed services employment and reemployment rights act
What does USERRA do?
It treats service members that HAVE MET eligibility requirements as if they HAVE BEEN continuously employed for all plan provisions.
maternity, paternity and FMLA laws do not require service to be credited for breaks in service?
False- Service is required to be credited
Under paternity, maternity and FMLA laws how are paid and unpaid hours counted with regards to Leave of Absences?
1: If Paid, then hours are credited under normal hours of service definition
2: If unpaid, then hours are credited to a max of 501 hours just to prevent breaks in service.
FYI- Hours did not have to be counted towards years of service.
When the term “Coinciding With” is used to determine the entry date- does it mean the current month or next month?
It’s weird, but unless it occurs on the exact day, then it is the 1st of the next month.
