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.
IRC § 411(a)(6)(A)), DOL Reg §2530.200b-3, IRC Secs. 410(a)(5)(C) , 411(a)(6)(A)).
Additional Helpful Information
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.
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.
For nonvested participants:
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.
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.
- 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.