Step 3: Write It Into the Plan
Put the periods and your break-in-service rules in the plan document and summary plan description, applied uniformly within each category.
The three things to know.
Definitions
Hours of service, full-time employee, the periods, the categories and the method for each.
Rules for Breaks
How you treat rehires, special unpaid leave and breaks in service.
Review by Counsel
Plan document language is legal text. Have counsel or your document provider draft and review it.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
Aligning an Old Plan Document
An employer’s plan document says an employee is eligible after working 30 hours a week for 60 days, but the design now uses a 12-month look-back.
What the Rule Produces
The wording no longer matches how eligibility works. The employer has counsel amend the plan to state the measurement, administrative and stability periods and the definition of hours of service, then updates the SPD.
Four steps to apply it.
1. Gather terms
List definitions and periods.
2. Draft
Have counsel write the amendment.
3. Update the SPD
Describe eligibility in plain language.
4. Communicate
Notify participants.
Where it goes wrong. Leaving old eligibility language in the plan after changing the design.
The questions that come up next.
Does the SPD need to mention it?
Eligibility rules belong in the SPD, so yes, in plain language.
What if the plan already has an eligibility clause?
Update it so it matches the design, not the other way around.
Is a benefits guide enough?
No. The guide is a communication tool.
Who signs the amendment?
The plan sponsor, following its own approval process.
Do we need to notify the carrier?
Depends on the policy. Ask your advisor.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Step 4: Build the Hours Feed
Decide which system is the record of hours worked and paid, how non-hourly staff are counted, and how paid leave flows in.
Step 5: Audit Mid-Window
Check halfway through that hours are landing in the right employee records and that new hires are in the right measurement group.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
Talk it through with someone who runs this every year.
We help you choose the design, document it and reconcile the hours before the numbers reach your reporting.
An independent employee benefits consulting firm. We look at the entire benefits program — cost, plan performance, risk and administration.
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