Читать книгу Auditing Employee Benefit Plans - Josie Hammond - Страница 31

The plan must specify eligibility rules. Pension plans have very specific minimum rules. No person can be required to be employed more than 12 months for eligibility (two years if the plan is fully vested). Minimum entry age cannot exceed 21. (The combination of these two rules can result in a wait longer than the minimum wait. An 18-year-old, for example, can be required to wait three years for entry.) These rules are to be included in the plan document.

For this purpose, a year has a specific definition. Generally, an employee has to work at least 1,000 hours for the year to count for eligibility purposes. However, many plans use the elapsed time method, which does not count hours worked only a calendar period of service.

These basic age and service rules define which employees must be considered for testing.

Plans can exclude persons for other reasons—location, job description, and so on. These exclusions may not violate other federal laws governing discrimination on account of age, sex, religious affiliation, and the like. These exclusions are treated as employees eligible to participate, but not receiving benefits for purposes of the plan’s satisfying the various discrimination requirements. Part-time status is not a permissible definition for exclusion from plan eligibility; the 1,000-hour rule described previously is the only basis for excluding persons because of the number of hours worked.

403(b) plans have slightly different eligibility standards for employee salary deferrals, which are to be documented in the plan. Few exclusions from eligibility are permitted for employee salary deferral contributions. The standards described previously are permissible with respect to employer contributions to a 403(b) plan.

Welfare plans do not currently have specific eligibility standards that are set by law. The plans, however, must define what standards apply for plan participation. This is currently a confusing area as the Affordable Care Act (ACA) gradually phases in. There are new rules with respect to when dependents lose their coverage; a new nondiscrimination standard that is not yet in force; and mandatory coverage features in 2014, for which some temporary relief has been granted generally through the end of the 2016 plan year. A violation of these evolving rules may change the tax status of a provided benefit or subject the employer to a penalty, but in general, they will not change the plan’s obligations unless the plan sponsor chooses to amend the plan to revise the definition of eligibility.