Must a qualified plan with a service requirement of less then one-year use the elapsed year method instead of the hours of counting method?
Rev. 6/26/02

Plans with less than 1 year of service may use the hours of service counting method to calculate each month of service. The maximum hours that may be required for each consecutive month is 83⅓ hours, which is derived by dividing 1,000 hours into 12 monthly amounts. Thus, if there are 6 months of service required, the employee would need to be credited with at least 83⅓ hours each month for six months and not 500 hours in total. However, when using less than 12 months and counting hours, the 1,000 hour statutory rule cannot be violated. To illustrate this, if an employee, in our example of counting hours during a 6 consecutive month period, was unable to complete 83⅓ hours in each of 6 consecutive months, the employer must still abide by the 1,000 within the first 12 months of hire statutory rule. Therefore, if the employee worked an unbalanced schedule and failed 83⅓ hours in six consecutive months, but nevertheless completed 1,000 within the first 12 months, the employee would become eligible (having satisfied the statutory 1,000 hours within 12 months) and would enter the plan on the next entry date.