Unit 6: Eligibilty

Question 1

What’s six steps should be undertaken to determine eligibility?

Answer 1

1: identify requirements

2: accumulate data

3. Determine age

4 determined service

5 determine eligible categories

6 determine entry dates

Question 2

There are two computation periods for initial eligibility what are they?

Answer 2

Up to 12 months and 1000 hours from date of hire for period one.

For period two From plan year start date.

Question 3

What is the counting hours method of determining eligibility?

Are vacation hours counted?

Answer 3

Employee gets credit for hours worked and the employee gets credit for hours entitled such as vacation

Question 4

If using the counting hours method can an employer require less than 1000 hours worked?

Answer 4

Absolutely

Question 5

What is the equivalency method when determining service eligibility?

Answer 5

The employer sets a preset number for time worked such as one week = 45 hrs Or semi monthly equals 95 hours.

Question 6

What is the elapsed time method as it pertains to determining service eligibility?

Answer 6

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.

Question 7

Are part-time employees allowed to be excluded from the 401(k)?

Answer 7

No they are not.

Question 8

How does the secure act allow part-time employees to become eligible?

Answer 8

Three years of consecutive employment of 500 hours a year or greater by an employee will equal eligibility.

Question 9

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?

Answer 9

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.

Question 10

Are employers allowed to exclude certain job type such as truck drivers from the 401(k)?

Answer 10

Yes they can- except the plan must satisfy coverage requirements

Question 11

Give three examples of excludable employees: and what must the plan do?

Answer 11

By geographic location

By job description

By division

*** The plan must pass nondiscrimination coverage testing

Question 12

What are the three types of enrollment?

Answer 12

One: automatic enrollment

Two: affirmative enrollment

Three: special enrollments such as dual eligibility

Question 13

What is dual eligibility? (2 examples)

Answer 13

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.

Question 14

Are adjustments to eligibility allowed that increase the requirements?

Answer 14

Yes. Employers can increase eligibility. They may increase it for all employees or just newly hired employees.

Question 15

Under what 2 conditions can a plan sponsor exclude employees that were previously eligible?

Answer 15

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.

Question 16

How is a break in service defined under the counting hours rules?

Answer 16

When an employee works less than 501 Hours in 12 consecutive months

Question 17

How is a break-in service defined under elapsed service rules?

Answer 17

Not being employed for 12 months

Question 18

How do plans that don’t utilize break in service provisions handle the rehiring of employees for Plan entry? (3 conditions)

Answer 18

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.

Question 19

What does USERRA stand for?

Answer 19

Uniformed services employment and reemployment rights act

Question 20

What does USERRA do?

Answer 20

It treats service members that HAVE MET eligibility requirements as if they HAVE BEEN continuously employed for all plan provisions.

Question 21

maternity, paternity and FMLA laws do not require service to be credited for breaks in service?

Answer 21

False- Service is required to be credited

Question 22

Under paternity, maternity and FMLA laws how are paid and unpaid hours counted with regards to Leave of Absences?

Answer 22

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.

Question 23

When the term “Coinciding With” is used to determine the entry date- does it mean the current month or next month?

Answer 23

It’s weird, but unless it occurs on the exact day, then it is the 1st of the next month.