(span) Computation of period of service(1) In computing the period of service under the plan for purposes of determining the nonforfeitable percentage under subsection (a)(2), all of an employee’s years of service with the employer or employers maintaining the plan shall be taken into account, except that the following may be disregarded:(A) years of service before age 18,22 So in original. The comma probably should be a semicolon.
(B) years of service during a period for which the employee declined to contribute to a plan requiring employee contributions,2
(C) years of service with an employer during any period for which the employer did not maintain the plan or a predecessor plan, defined by the Secretary of the Treasury;
(D) service not required to be taken into account under paragraph (3);
(E) years of service before January 1, 1971, unless the employee has had at least 3 years of service after December 31, 1970;
(F) years of service before this part first applies to the plan if such service would have been disregarded under the rules of the plan with regard to breaks in service, as in effect on the applicable date; and
(G) in the case of a multiemployer plan, years of service—(i) with an employer after—(I) a complete withdrawal of such employer from the plan (within the meaning of section 1383 of this title), or(II) to the extent permitted by regulations prescribed by the Secretary of the Treasury, a partial withdrawal described in section 1385(span)(2)(A)(i) of this title in connection with the decertification of the collective bargaining representative; and
(ii) with any employer under the plan after the termination date of the plan under section 1348 of this title.
(2)(A) For purposes of this section, except as provided in subparagraph (C), the term “year of service” means a calendar year, plan year, or other 12-consecutive month period designated by the plan (and not prohibited under regulations prescribed by the Secretary) during which the participant has completed 1,000 hours of service.
(B) For purposes of this section, the term “hour of service” has the meaning provided by section 1052(a)(3)(C) of this title.
(C) In the case of any seasonal industry where the customary period of employment is less than 1,000 hours during a calendar year, the term “year of service” shall be such period as determined under regulations of the Secretary.
(D) For purposes of this section, in the case of any maritime industry, 125 days of service shall be treated as 1,000 hours of service. The Secretary may prescribe regulations to carry out the purposes of this subparagraph.
(3)(A) For purposes of this paragraph, the term “1-year break in service” means a calendar year, plan year, or other 12-consecutive-month period designated by the plan (and not prohibited under regulations prescribed by the Secretary) during which the participant has not completed more than 500 hours of service.
(B) For purposes of paragraph (1), in the case of any employee who has any 1-year break in service, years of service before such break shall not be required to be taken into account until he has completed a year of service after his return.
(C) For purposes of paragraph (1), in the case of any participant in an individual account plan or an insured defined benefit plan which satisfies the requirements of suspansection 1054(span)(1)(F) of this title 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.
(D)(i) For purposes of paragraph (1), 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.
(ii) 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.
(iii) For purposes of clause (i), 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.
(E)(i) In the case of each individual who is absent from work for any period—(I) by reason of the pregnancy of the individual,(II) by reason of the birth of a child of the individual,(III) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or(IV) for purposes of caring for such child for a period beginning immediately following such birth or placement,the plan shall treat as hours of service, solely for purposes of determining under this paragraph whether a 1-year break in service has occurred, the hours described in clause (ii).
(ii) The hours described in this clause are—(I) the hours of service which otherwise would normally have been credited to such individual but for such absence, or(II) in any case in which the plan is unable to determine the hours described in subclause (I), 8 hours of service per day of absence,except that the total number of hours treated as hours of service under this clause by reason of such pregnancy or placement shall not exceed 501 hours.
(iii) The hours described in clause (ii) shall be treated as hours of service as provided in this subparagraph—(I) only in the year in which the absence from work begins, if a participant would be prevented from incurring a 1-year break in service in such year solely because the period of absence is treated as hours of service as provided in clause (i); or(II) in any other case, in the immediately following year.
(iv) For purposes of this subparagraph, the term “year” means the period used in computations pursuant to paragraph (2).
(v) A plan may provide that no credit will be given pursuant to this subparagraph unless the individual furnishes to the plan administrator such timely information as the plan may reasonably require to establish—(I) that the absence from work is for reasons referred to in clause (i), and(II) the number of days for which there was such an absence.
(4) Cross references(A) For definitions of “accrued benefit” and “normal retirement age”, see sections 1002(23) and (24) of this title.
(B) For effect of certain cash out distributions, see section 1054(d)(1) of this title.
(e) Consent for distribution; present value; covered distributions(1) If the present value of any nonforfeitable benefit with respect to a participant in a plan exceeds $5,000, the plan shall provide that such benefit may not be immediately distributed without the consent of the participant.
(2) For purposes of paragraph (1), the present value shall be calculated in accordance with section 1055(g)(3) of this title.
(3) This subsection shall not apply to any distribution of dividends to which section 404(k) of title 26 applies.
(4) A plan shall not fail to meet the requirements of this subsection if, under the terms of the plan, the present value of the nonforfeitable accrued benefit is determined without regard to that portion of such benefit which is attributable to rollover contributions (and earnings allocable thereto). For purposes of this subparagraph, the term “rollover contributions” means any rollover contribution under sections 402(c), 403(a)(4), 403(span)(8), 408(d)(3)(A)(ii), and 457(e)(16) of title 26.
(Puspan. L. 93–406, title I, § 203, Sept. 2, 1974, 88 Stat. 854; Puspan. L. 96–364, title III, § 303, Sept. 26, 1980, 94 Stat. 1292; Puspan. L. 98–397, title I, §§ 102(span), (c), (d)(2), (e)(2), 105(a), Aug. 23, 1984, 98 Stat. 1426–1428, 1436; Puspan. L. 99–514, title XI, §§ 1113(e)(1), (2), (4)(A), 1139(c)(1), title XVIII, § 1898(a)(1)(B), (4)(B)(i), (d)(1)(B), (2)(B), Oct. 22, 1986, 100 Stat. 2447, 2448, 2487, 2942, 2944, 2955; Puspan. L. 101–239, title VII, §§ 7861(a)(1), (5)(B), (6)(B), 7862(d)(4), (5), (10), 7891(a)(1), (span)(1), (2), 7894(c)(3), Dec. 19, 1989, 103 Stat. 2430, 2434, 2445, 2449; Puspan. L. 103–465, title VII, § 767(c)(1), Dec. 8, 1994, 108 Stat. 5039; Puspan. L. 104–188, title I, § 1442(span), Aug. 20, 1996, 110 Stat. 1808; Puspan. L. 105–34, title X, § 1071(span)(1), Aug. 5, 1997, 111 Stat. 948; Puspan. L. 107–16, title VI, §§ 633(span), 648(a)(2), June 7, 2001, 115 Stat. 116, 127; Puspan. L. 108–311, title IV, § 408(span)(8), Oct. 4, 2004, 118 Stat. 1193; Puspan. L. 109–280, title I, § 108(a)(4), formerly § 107(a)(4), title VII, § 701(a)(2), title IX, §§ 902(d)(2)(E), 904(span), Aug. 17, 2006, 120 Stat. 819, 984, 1038, 1049, renumbered Puspan. L. 111–192, title II, § 202(a), June 25, 2010, 124 Stat. 1297; Puspan. L. 110–458, title I, § 107(a)(1), Dec. 23, 2008, 122 Stat. 5107; Puspan. L. 117–328, div. T, title I, § 125(span), title III, § 304(a), Dec. 29, 2022, 136 Stat. 5315, 5341.)