FIS Relius

According to recent IRS examinations, applying eligibility conditions correctly (entering too early, too late or not at all) continues to be a problem for many plans. The results are not surprising considering the fact that rules are counterintuitive. Furthermore, many plans now impose early eligibility conditions (i.e., less than one year) for which the regulations provide far less guidance.

Some of the more challenging eligibility questions that confront a retirement plan practitioner are questions relating to rehired and part-time employees. When does a rehired employee re-enter/enter the plan? Can a plan exclude part-time employees? How may the plan define part-time employees? When and how do the break-in-service rules affect rehired and part-time employees? Does the one-year hold out rule apply to a 401(k) plan? What vesting years of service must the plan credit for a rehired employee? Does it matter whether the participant received a cash-out distribution? If the rehired participant is receiving distributions, do you stop the distributions? Surprisingly, these questions and more arise often. A misapplication of the rules raises disqualification issues and the possibility of corrective contributions.

With some well-crafted examples, the speaker illustrates how to apply these rules and eliminate the confusion that seems to follow rehired and part-time employees, as well as the early eligibility provisions. Practitioners attending this webcast will obtain the necessary understanding to apply the rules properly, avoiding hours of difficult research.

Join David in this 100-minute Web seminar as he helps you gain a better understanding of all the ins and outs of rehired employees.

Topics Include:

• When do rehired employees re-enter/enter the plan?
• May a plan exclude part-time, seasonal or temporary employees?
• What is the proper way to apply early eligibility provisions?
• What is the proper application of a “months” eligibility provision that does not include a service requirement?
• When and how do the break-in-service rules apply?
• Can you utilize the one-year hold-out rule in a 401(k) plan?
• When can the plan treat the rehired employee as a new employee?
• Distributions to rehired employees
• Defining part-time employees
• Crediting vesting service for rehired employees
• When does an employee complete a year of service?

There are no prerequisites or advance preparation for this program.

Level: Overview

NASBA Field of Study: Taxes

Speaker: David Schultz, J.D.

Objectives: After attending the program, you should be able to:

• Determine when a rehired employee enters the plan.
• Apply the break-in-service rules correctly.
• Design a part-time employee exclusion correctly.
• Determine when the plan may treat a rehired employee as a new employee.
• Apply properly early eligibility provisions.
• Apply the repayment and restoration rules properly.
• Determine how to administer the eligibility rules where there is missing service data.
• Apply properly a “months” eligibility provision

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