After the eligibility FAQ in our last E-mail Alert, we received several calls that related other fascinating eligibility scenarios. This just goes to show how intricate this supposedly “basic subject” can become, especially when someone leaves employment before meeting the plan’s eligibility requirements and is then rehired. The following is one example:
Rev. 06/22/06, E-mail Alert 2006-12 Revised 12/29/08

The plan design specifics:
Eligibility: 1 year of service; 1,000 hours
Plan Year: April 1 to March 31
Entry dates: Semi-annual on April 1 and October 1
Eligibility Computation Period for Second Eligibility Period Changes to Plan Year

Employee data
Hired: May 10, 2008
Terminated: Aug. 2, 2008
Hours worked: 650
Re-hired: May 31, 2009
Employee continuously works a 40-hour workweek from May 31, 2009 to date.

When does the employee enter the plan, on April 1, 2010 or October 1, 2010?

The employee worked over 501 hours between May 10, 2008 and Aug. 2, 2008 and then returned before a 12-consecutive month period of absence occurred (measured from Aug. 2, 2008); thus, no break in service had occurred as of the date rehired, May 31, 2009. Since there was no break in service, and because the employee did not satisfy the 1,000-hour requirement in his first year of employment; the plan provision for shifting to the plan year for measuring the next eligibility period is to be used in this case.

During the plan year period of April 1, 2009 to March 31, 2010, the employee worked more 40 hours a week which adds-up to much more than the 1,000 hours needed to satisfy eligibility. Therefore the employee would have satisfied eligibility on March 31, 2010, and would enter the plan on the next entry date, April 1, 2010.