4. Elapsed time

Statement of Requirement: Reg. §§ 1.410(a)-7, 1.410(a)-9T

Sample Plan Language:

(Note to reviewer: Use of elapsed time eliminates or simplifies several plan provisions that would otherwise be required if hours of service are counted. The following definitions should replace the otherwise required year of service, break in service, and hour of service definitions.)

For purposes of determining an employee's initial or continued eligibility to participate in the plan or the nonforfeitable interest in the participant's account balance derived from employer contributions, (except for periods of service which may be disregarded on account of the "rule of parity" described in section _____ ) an employee will receive credit for the aggregate of all time period(s) commencing with the employee's first day of employment or reemployment and ending on the date a break in service begins. The first day of employment or reemployment is the first day the employee performs an hour of service. An employee will also receive credit for any period of severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days.

(Note to reviewer: Wording in parenthesis applies only in plans which utilize the rule of parity. See LRMs #21 and #57.)

For purposes of this section, hour of service shall mean each hour for which an employee is paid or entitled to payment for the performance of duties for the employer.

Break in service is a period of severance of at least 12 consecutive months.

Period of severance is a continuous period of time during which the employee is not employed by the employer. Such period begins on the date the employee retires, quits or is discharged, or if earlier, the 12-month anniversary of the date on which the employee was otherwise first absent from service.

In the case of an individual who is absent from work for maternity or paternity reasons, the 12-consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a break in service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption

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of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement.

Each employee will share in employer contributions for the period beginning on the date the employee commences participation under the plan and ending on the date on which such employee severs employment with the employer or is no longer a member of an eligible class of employees.

If the employer is a member of an affiliated service group (under section 414(m)), a controlled group of corporations (under section 414(b)), a group of trades or businesses under common control (under section 414(c)) or any other entity required to be aggregated with the employer pursuant to section 414(o), service will be credited for any employment for any period of time for any other member of such group. Service will also be credited for any individual required under section 414(n) to be considered an employee of any employer aggregated under sections 414(b), (c), (m) or (o).

(Note to reviewer: Minimum participation standards requiring completion of 1,000 hours of service to be credited with a year of service for eligibility are reduced to 500 hours for purposes of establishing eligibility for elective deferrals for years beginning after December 31, 2020. See Section 112 of the SECURE Act of 2019 and Section 125 of the SECURE 2.0 Act of 2022. If a plan uses the elapsed time method for eligibility service crediting, the long-time part-time rules do not apply. Therefore, an employee, including an employee who is classified as a part-time employee, cannot be required to complete more than a 1-year period of service under the elapsed time method to be eligible to participate in a qualified CODA. See Section 112 of the SECURE Act. See also CODA LRM II for additional information.)