Understanding Eligibility-Based Groups

Following are some examples that use eligibility history as grouping criteria.

Service

Service only accrues while an employee meets plan eligibility criteria:

Group Criteria	Service Definition
Eligible	Plan service rules
Ineligible	No service accrues

Elapsed time and hours equivalence service accrue based on an employee's action and reason history. If you fail to establish eligible and ineligible definitions, employees continue to accrue service for time worked while ineligible. For example, an hourly employee who used to be salaried could continue to accrue service under the salaried plan. This may be desirable for vesting service, but is likely undesirable in other situations.

Hours counting service accrues based on consolidated hours. If the consolidated hours definition already distinguishes between hours worked while eligible and hours worked while ineligible, you may not need to create separate eligible and ineligible definitions for this service type.

Cash Balance Accounts

Accounts earn interest at all times, but only get additional earnings-based credits during periods of eligibility:

Group Criteria	Cash Balance Definition
Eligible	Cash balance credit of 4 percent of salary and interest
Ineligible	Interest only

If the consolidated earnings definition excludes ineligible earnings, you may not need to set up eligible and ineligible groups for cash balance accounts.

If the consolidated contributions definition only includes eligible contributions, you may not need to set up eligible and ineligible groups for employee accounts.

Consolidated Earnings

The final average earnings (FAE) function only uses earnings from periods when an employee met the plan's eligibility requirements. Because FAE uses the consolidated earnings result, you restrict earnings at the consolidation level:

Group Criteria	Consolidated Earnings Definition
Eligible	Plan earnings definition
Ineligible	Zero earnings

Note:

In this scenario, you would set the FAE definition to ignore zeros. Otherwise, you might lower the average by picking up zeros from periods of ineligibility.