Definition
Calendar year, plan-year or other plan-designated 12-consecutive-month period, during which a participant fails to work the number of hours required to ensure continuation of coverage, vesting or eligibility to receive contributions.
The plan defines break-in-service and as such, the definition varies among plans. However, a plan cannot require that a participant work more than 500 hours during a plan year in order to avoid a break-in-service.
Referring Cite
IRC § 411(a)(6)(A)), DOL Reg §2530.200b-3, IRC Secs. 410(a)(5)(C) , 411(a)(6)(A)).
Additional Helpful Information
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If a participant has a 1-year break in service ,service before the break is not required to be taken into account under the plan until the participant has completed a year-of- service after his return.
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In the case of any participant in a defined contribution plan, or an insured defined benefit plan, who has 5 consecutive 1-year breaks in service, years of service after such 5-year period shall not be required to be taken into account for purposes of determining the nonforfeitable percentage of his accrued benefit derived from employer contributions which accrued before such 5-year period.
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For nonvested participants:
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In the case of a nonvested participant, years of service with the employer or employers maintaining the plan before any period of consecutive 1-year breaks in service shall not be required to be taken into account if the number of consecutive 1-year breaks in service within such period equals or exceeds the greater of—
(I) 5, or
(II) the aggregate number of years of service before such period.
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Years of service not taken into account If any years of service are not required to be taken into account by reason of a period of breaks in service to which clause (i) applies, such years of service shall not be taken into account in applying clause (i) to a subsequent period of breaks in service.
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- For this purpose, the term “nonvested participant” means a participant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contributions.
