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                                                                CYCLE A Submission Period – 02/01/2016 – 01/31/2017

Employee                                                  Explanation No. 1

Benefit                                                   Minimum

                                                          Participation
Plans
                                                          Standards

Note:                                                     The purpose of the Worksheet Number 1 (Form 5622) and 
                                                          this explanation is to identify any major problems an  employ-
Plans submitted during the Cycle A submission period      ee benefit plan might have in satisfying the  minimum partic  -
must satisfy the applicable changes in plan qualification ipation standards of Internal Revenue  Code section 410(a). 
requirements listed in Section IV of Notice 2015-84,      However, there may be issues not  mentioned  in the work-
2015-1 I.R.B. 1 (the 2015 Cumulative List).               sheet that could affect the plan’s  qualification.
                                                               
                                                          The  worksheet concerns plans to  which Code section  410 
This publication contains copies of:                      applies, except those mentioned in section 410(c)  (such as 
Form 5622, Worksheet 1                                    governmental plans) and plans that cover  participants who 
Form 6040, Deficiency Checksheet 1                        are employed in maritime or seasonal  industries.
                                                                
These forms are included as examples only and should      Generally, a Yes answer to a question on the worksheet in-
not be completed and returned to the Internal Revenue     dicates a favorable conclusion, while a No answer signals a 
Service.                                                  problem concerning plan qualification. This rule may be al-
                                                          tered by specific instructions for a given question. Please ex-
                                                          plain any No answer in the space provided on the worksheet. 
                                                          The numbers in brackets correspond to the paragraph num-
                                                          ber on the Employee Plan Deficiency Checksheet and EDS 
                                                          generated Letters 1196, 1197, and 1955.
                                                                
                                                          The sections cited at  the end of  each paragraph  of  expla-
                                                          nation are from the Internal Revenue Code, the  Income Tax 
                                                          Regulations, and Department of Labor (DOL)  Regulations.
                                                               
                                                          A plan with participation requirements that are more  gener-
                                                          ous than the statutory minimum will not fail to qualify  merely 
                                                          because the plan does not adhere to the specific  language 
                                                          found in the statute if it can be demonstrated  that the min-
                                                          imum statutory requirements are met. For  example, a plan 
                                                          that provides immediate participation  would satisfy the stat-
                                                          utory minimum participation  requirements even though lan-
                                                          guage about a requirement  for certain years of service is not 
                                                          found in the plan.

                                                          The technical principles in this publication may be changed 
                                                          by future regulations or guidelines.

Publication 6388 (Rev. 4-2016)  Catalog Number 48067N  Department of the Treasury  Internal Revenue Service  www.irs.gov

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Page 2 CYCLE A Submission Period – 02/01/2016 – 01/31/2017

I. Age and Service

Line a. If you answer No to this question, DO NOT complete the rest of the worksheet. If the plan provides for participation only on spec-
ified entry date(s), but no other age or service requirements are provided, complete only I.c. of the worksheet.
410 (a) (1) (A)
1.410 (a) -3 (a)

Line b. Generally, an employee who is otherwise eligible(for example, a salaried employee in a salaried only plan)must be eligible to par-
ticipate in the plan at age 21, or upon completion of 1 year of service, whichever is later. However, if the plan provides full and immediate
vesting,an employee otherwise eligible must also be eligible to participate at age 21 or upon completion of 2 years of service, whichever
is later. Schools substitute age 26 forage 21 if the school’s plan provides for full and immediate vesting and requires no more than 1 year
of service as a condition of participation.

If the plan uses the elapsed time method of crediting service, substitute “period of service” for “year of service” above.
410(a)(1)
1.410(a)-3T
1.410(a)-7(c)
1.410(a)-3

Line c. General Rule-Once an employee, otherwise eligible, meets the statutory age and service requirements, the plan must cover him
or her on either the first day of the plan year after the employee has met the statutory requirements, or 6 months after the day on which
the employee fulfills such requirements, which ever is earlier. There is an exception to this rule if an employee was separated from ser-
vice and did not return before the applicable entry date referred to above. If the separated employee returns, after either date, without
incurring a break in service, the employer must cover the employee upon return. When a plan’s service requirements are more generous
than the statute allows, the plan will qualify if the total waiting period is not longer than the statutory minimums. For example, in a plan
with no age or service requirement, a new employee, otherwise eligible,may be excluded until the next annual anniversary date of the
plan after employment. This provision will not disqualify the plan because no employee can be required to wait longer than a 12-month
period under the terms of the plan. Rules concerning a rehired employee who has a break in service are in II. j. and k. and III.g. and h. of
these explanations.

Special rules apply where the plan uses the elapsed time method of crediting service. These are: a plan using the elapsed time method
must provide that an employee, once eligible, who satisfies the statutory age and service requirement must be covered on the first day
of the plan year after the employee has met the statutory requirements, or 6 months after the day on which the employee fulfills such
requirements, whichever is earlier, unless the employee was separated from service before the applicable entry date. Apply different
rules if the separated employee returns after the applicable entry date, whether or not the employee had a period of severance. A period
of severance begins on the date of severance from service. A “severance from service” occurs either when an employee quits, retires, is
discharged, or dies; or on the first anniversary of the first day of a period of absence from service for any other reason (such as vacation,
holiday, disability, or layoff), whichever date comes first. Thus, if an employee separates, for any reason other than quitting, retiring, or
discharge and returns within 12 months, there is no period of severance. In that case, if the employee returns after either entry date, the
employer must cover the employee no later than the date the absence ended, effective the first applicable entry date that occurred during
the absence from service. In the case of a period of severance, if the separated employee returns after a period of severance of less than
1 year and that period includes an entry date applicable to the employee, then the employer must cover the employee no later than the
date on which the employee ended the period of severance. Rules for a rehired employee who has incurred a 1-year period of severance
are in III. g. and h. of these explanations. The above rule is illustrated in the following examples.

Example 1.
A plan provides for a minimum age requirement of 21 and a minimum service requirement of 1 year with semi-annual entry dates. Em-
ployee X, after satisfying the minimum age requirement, became disabled for 9 consecutive months and then returned to service. Since
X separated from service because of a disability, there is no severance from service until the first anniversary of the date the separation
occurred. X therefore did not have a period of severance under the elapsed time rules. During the period of absence, X completed a
1-year period of service and passed a semi-annual entry date after satisfying the minimum service requirement. Accordingly, the plan
must make X a participant no later than the return to service, effective as of the applicable entry date.
Example 2.
Employee B, after satisfying the minimum age and service requirements, quit work (date the period of severance begins) before the
next semi-annual entry date, and then returned to service before incurring a 1-year period of severance but after the semi-annual entry
date. Employee B is entitled to become a participant immediately upon the return to service, effective as of the date of the return.
410(a) (4)
1.410(a)-4(b)
1.410(a)-7(c) (3)

Line d. For plan years beginning before January 1, 1988, a defined benefit plan or a target benefit plan may exclude an employee be -
cause of maximum age, provided the maximum age specified is not more than 5 years before a plan’s normal retirement age. An employ -

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ee may be denied entrance into a plan because of maximum age only if he or she commences employment within 5 years of the plan’s 
normal retirement age. The maximum age conditions have been repealed effective for plan years beginning on or after January 1, 1988, 
with respect to employees credited with an hour of service on or after that date. Accordingly, any employee, regardless of age, who has 
at least one hour of service after December 31, 1987, and who satisfies the otherwise applicable conditions for participation, may not 
be excluded from participation on account of age beginning with the first day of the first plan year commencing in 1988. For purposes of 
determining whether such an employee has met the conditions for participation, all service otherwise required to be credited, including 
service in pre-1988 plan years, must be credited regardless of whether the plan contained a maximum age exclusion prior to the first plan 
year beginning in 1988.
410(a)(2) as amended by section 9203(a)(2) of Pub. L.
99-509 and Proposed Regs. 1.410(a)-4A.

II. Years of Service

If the plan has no service requirement, DO NOT complete this section. 

Line a. An eligibility computation period is a 12-consecutive-month period used to determine whether an employee has completed a year 
of service for participation purposes. Any plan must designate an eligibility computation period, except a plan that uses an “elapsed time” 
method of counting service or a plan that has no service requirement for eligibility to participate. If the plan uses the “elapsed time” method 
of counting service, check N/A and skip to section III.
DOL Regs. 2530.200b-1(a)

Line b. Depending on the definition of “hours of service” and the method used to count these hours, a plan must credit an employee with 
1 year of service for eligibility if the employee completes at least 1000, 870, or 750 hours of service in an eligibility computation period.

(i) (H = 1000) A plan that counts all hours of service, or that uses an equivalency based on a period of employment (day, week, 
semi-monthly payroll period, month, or shift), cannot require the completion of more than 1000 hours of service. 
410(a) (3) (A)
DOL Regs. 2530.200b-1(a)
DOL Regs. 2530.200b-3(e)

(ii) (H = 870) A plan that counts “hours worked,” or that uses an equivalency based on earnings for an employee who is compensated 
on an hourly rate, cannot require the completion of more than 870 hours of service.
DOL Regs. 2530.200b-3(d) (1)
DOL Regs. 2530.200b-3(f) (1)

(iii) (H = 750) A plan that counts “regular time hours,” or that uses an equivalency based on earnings for an employee who is compen-
sated on a basis other than an hourly rate, cannot require the completion of more than 750 hours of service.
DOL Regs. 2530.200b-3(d) (2)
DOL Regs. 2530.200b-3(f) (2)

Answer the following by using the applicable method of counting hours (i, ii, or iii above).

Line c. If a plan counts all hours of service, credit each hour for which (1) an employee is paid or entitled to payment for performance of 
duties, (2) an employee is paid or entitled to payment because of a period of time during which no duties are performed, and (3) back pay 
is either awarded or agreed to by the employer.
DOL Regs. 2530.200b-2(a)

If a plan credits hours of service by an equivalency based on a period of service, and an employee is required to be credited with at least 
1 hour of service under the paragraph above, then, depending on the basis used, the plan must credit hours of service as follows:

Basis of Equivalency:             Number of Hours Credited:
Day........................................................................at least 10
Week.....................................................................at least 45
Bi-weekly payroll period........................................at least 95
Month....................................................................at least 19
     
If a plan counts “hours worked,” credit each hour for which an employee is paid or entitled to payment for the performance of duties; also 
credit hours for which back pay is awarded, or agreed to, by the employer to the extent that the back pay covers a period in which the
employee would have been employed in the performance of duties for the employer.
DOL Regs. 2530.200b-3(d) (3) (i)

If a plan counts “regular time hours,” credit each hour for which an employee is paid or entitled to payment for the performance of duties 
(except hours for which a premium rate is paid).
DOL Regs. 2530.200b-3(d) (3) (ii)

If a plan credits hours of service by an equivalency based on earnings for an employee who is compensated on an hourly rate, an

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employee must be credited during a computation period with at least the number of hours equal to either the employee’s total earnings-

(1) from time to time during the computation period, divided by the hourly rate of those times; or

(2) for performance of duties during the computation period divided either by the employee’s lowest hourly rate during that time, or by
the lowest hourly rate payable to an employee in the same, or a similar, job classification.
DOL Regs. 2530.200b-3(f) (1) (i)

If a plan credits hours of service by an equivalency based on earnings, and determines compensation other than on an hourly rate, an
employee must be credited during a computation period with at least the number of hours equal to his or her total earnings for duties
performed during that period, divided by the employee’s lowest hourly rate of compensation during the same period. (See the DOL Reg-
ulations.) Note: If the same hourly rate of compensation is used for all employees, this method may result in discrimination in favor of
highly compensated employees.
DOL Regs. 2530.200b-3(f) 2

Line d. If H =1000 in b, above, answer this question; otherwise check N/A. If a plan credits hours of service of periods during which no
duties are performed, the plan must designate the method of determining the number of hours to be credited and the method of crediting
the hours to the computation periods. The plan must conform to the requirements of DOL Regulations sections 2530.200b-2(b) and (c).
Section 2530.200-2(f) of the DOL Regulations, however, also indicates that a plan is not required to state these rules if they are incorpo-
rated by reference.
DOL Regs. 2530.200b-2(b) and (c)
DOL Regs. 2530.200b-2(f)

Line e. In general, the plan must initially use an eligibility computation period of 12-consecutive-months, beginning with the employee’s
employment commencement date. This date is the first day for which the employee is entitled to be credited with an hour of service for
the performance of duties.

An alternative eligibility computation period, which may be used when employment commencement dates cannot be specifically deter-
mined, is specified in DOL Regulations section 2530.202- 2(e). If this alternative is properly used, check Yes to this question.
DOL Regs. 2530.202-2(a)&(e).

Line f. If eligibility computation periods under a plan are determined solely on the anniversary of employment, check N/A.

In general, an eligibility computation period is used to determine whether an employee has fulfilled service requirements for admission
into the plan. It can also have a continuing use in determining whether an employee or participant with no vested interest in employer-de-
rived accrued benefits remains eligible to be a plan participant under the rule of parity (see j. and k. of these explanations). To determine
years of service for either initial eligibility or retention of eligibility to participate in the plan and consequent nonforfeiture of accrued bene-
fits, plans may choose one of two eligibility computation periods after the initial computation period. First, the plan may
continue to measure years of service, beginning on the employment commencement date and its anniversaries, or plans may shift to the
plan year. However, the first plan year must include the last day of the initial eligibility computation period. This overlapping is essential
to assure that the employee does not lose creditable service as a result of a gap between computation periods. A shift in the eligibility
computation period must be made with respect to all employees. The application of the above rules is given in the following example:

Assume these circumstances:

12/31/81
termination
of service

1/1/81
1000 hours
12/1/80 11/30/81
(date of hire)

The chart shows an employee is hired on December 1, 1980, and the plan year is a calendar year. The employee terminates service on
December 31, 1981, and has a 1-year break in service (December 31,1982). The employee has no vested right in any employer contri-
butions. The employee worked 1000 hours between January 1, 1981, and November 30, 1981, and attained 1 year of service within the
12-month period following the date of hire. Figuring the pre-break service under DOL Regulations section 2530.202-2(c), the employee
would receive credit for 1 year of service from December 1, 1980 (the date of hire) to November 30, 1981, and credit for another year
of service for the plan year (calendar 1981) which includes the last day of the initial eligibility computation period. Thus, the employee
receives credit for 2 years of service.
DOL Regs. 2530.202-2(b)
410(a) (3) (A)

If the plan uses the alternative eligibility computation period described in DOL Regulations section 2530.202-2(e), special rules apply for

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the eligibility periods following the initial computation period. If this alternative is properly used, check Yes to this question.
DOL Regs. 2530.202-2(e) (2)

Line g. The break in service rules allow a plan to disregard certain service before the employee has a break. If all of an employee’s service
with an employer is counted for participation, the plan need not provide these rules. In this case DO NOT complete questions g. through
k. of the worksheet.

Depending on the definition of “hour of service” and the method used to count these hours, a plan may charge an employee with a break
in service for eligibility computation period In which the employee fails to complete more than B hours of service. The number required
for B, if a certain method of counting hours is used, equals half the hours used in question b. of this section of the worksheet. Therefore,
a plan may provide that an employee be charged with a break in service if in a computation period the employee fails to complete: more
than 500 hours of service in a plan that counts all hours of service; or, more than 435 hours of the basis used is “hours worked”; or, more
than 375 if the basis is “regular time hours.”
DOL Regs. 2530.200b-3
DOL Regs. 2530.200b-4

Line h. To apply the break in service rules, the plan must use the same computation periods to measure breaks in service that it uses to
measure prior service for eligibility to participate. When a plan defines a year of service as 1000 (870 or 750) hours and an employee has
hours of service of more than 500 (435 or 375) but less than 1000 (870 or 750) hours, there is no break in service even though the plan
will not credit the employee with a year of service.
DOL Regs. 2530.200b-4(a) (2)

Line i. An individual shall be credited with certain hours of service if such individual is absent from work for any period by reason of 1)
pregnancy of the individual, 2) birth of a child of the individual, 3) placement of a child with the individual in connection with an adoption
or 4) caring for a child described in (2) or (3) immediately following such birth or placement. This credit is credit for maternity or paternity
leave. Credit for maternity or paternity leave is only made to avoid a break in service and not to obtain a year of service. The absence
does not have to be approved leave.

Credit for maternity or paternity leave is required only if such leave is on account of the reasons described above. Thus if an individual
quits employment with employer A and two years later adopts a child, no credit under this provision would be given if the individual even-
tually returns to work for employer A because said individual’s absence from employer A’s workplace is on account of quitting and not on
account of the adoption of or the caring for the child immediately following the adoption.

Hours of service must be credited to the computation period in which the first hour of maternity or paternity leave occurs, if such individ-
ual would experience a break in service with respect to such computation period if such maternity or paternity leave is not credited and
such individual will not experience a break in service if such maternity or paternity leave is credited. If such maternity or paternity leave
is not credited to the first computation period, it is credited to the second computation period whether or not it is needed to preclude a
break in service.

The rules may be illustrated with the following example: Individual A separates from service on March 1, 1986, of a calendar year compu-
tation period after earning 300 hours of service. The plan defines a year of service as a computation period in which the employee earns
1000 hours. The employer provides for paid maternity leave for a period not to exceed 300 hours.

Under the normal rules of crediting service paid maternity leave must be credited for service. Therefore, individual A in 1986 would not
experience a break in service even if the hours required to be credited under REA are not so credited. Accordingly, no hours of service
would be credited to the first computation period in 1986. Therefore, all such hours of service are credited in the second computation
period of 1987.

The number of hours credited with respect to a computation period is the number of hours such individual would normally have worked in
the computation period if such individual were not on maternity or paternity leave. If the number is not ascertainable, the plan may credit
8 hours with respect to any date said individual is absent on maternity or paternity leave. The plan may limit the number of hours credited
to any computation period to the number of hours needed to avoid a break in service, i.e., 501 hours, 436 hours, or 376 hours depending
on how hours are counted. The plan may provide that the participant has the burden of proving that the absence was by reason of one
of the covered causes.

The plan can use a simplified method for complying with the requirements relating to maternity and paternity absences. If the plan’s break
in service rules require a minimum of six consecutive one year breaks in service for service to be disregarded (versus the statutory min-
imum of five), then the plan will not have to include any special rules relating to maternity and paternity absence. This simplified method
is available only if the plan computes years of service on the basis of hours of service or permitted equivalencies. It does not apply to
elapsed time plans.
410(a)(5)(E)
1.401(a)-9

Lines j. and k. In general, an employee’s pre-break service does not have to be credited until the employee has completed 1 year of
service after the break. This should not be confused with the following rule of parity. If a participant with no vested interest has a break in
service under the rule of parity, service before the break need not be counted for participation if the number of consecutive 1-year breaks

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equals or is more than the greater of 5 or the aggregate years of service completed before the break. The aggregate years of service
completed before the break does not include years of service that need not be counted because of earlier breaks. In the case of a plan
described in section 410(a) (1) (B) (i), that is, a plan that provides for 100 percent vesting after 2 years of service, an employee who has
not met the plan’s service requirement and has a one year break in service need not have pre-break service taken into consideration for
purposes of meeting the plan’s service requirement.

When an employee’s pre-break service must be taken into account after a year of service, an employee who meets the plan’s eligibility
requirements and has a break need to be credited with the pre-break service until completion of a year of service after returning. However,
at that time the employee would be required to retro-actively participate under the plan. The following examples illustrate this rule:

Example 1.

A calendar year plan provides that an employee may enter the plan on the first semi-annual entry date, January 1, or July 1, after
satisfying the minimum age and service requirements. Employee C, after working 10 years, separated from service in 1976 with a vest-
ed benefit. On February 1, 1990, C returns to employment covered by the plan. C then completes a year of service. C must participate
either immediately on returning or, after the year of service, retroactively to February 1, 1990. The prior service cannot be disregarded
because of the vested benefit C had upon separation; therefore, the plan may not postpone participation until July 1,1990.

Example 2.

A defined contribution plan has a 1-year service requirement for participation and no age requirement. Contributions and allocations
are made for eligible employees on December 31. An employee is hired on January 1, 1985, and works 1000 hours in 1985 and 600
hours in 1986. On June 30, 1986, the employee separates from service without a vested interest. The employee then has a break in
service for the years 1987, 1988, and 1989. The employee returns on July 1, 1990. In accordance with the break in service rules, the
plan provides that the employee must complete 1 year of service after returning before the pre-break service is credited (year 1985).
Therefore, no contribution need be made on the employee’s behalf on December 31, 1990, because the employee is not eligible to
participate at that time. On June 30, 1991, the employee completes 1 year of service and is credited with the pre-break service. Be-
cause the number of consecutive breaks in service is less than 5, the pre-break service may not be ignored; thus the employee must
participate retroactively from July 1, 1990. If the employee is not covered on December 31, 1990, the waiting period is longer than the
maximum allowed, taking into account the pre-break service.
410(a)(5)(C) & (D)
1.410(a)-4

Ill. Years of Service and Breaks in Service Based on Elapsed Time

If the plan has no service requirement or does not use an elapsed time method of crediting years of service for eligibility, DO NOT com-
plete this section.

Unlike the general method of crediting service for an employee, which is based on hours and years of service, the elapsed time alternative
generally credits an employee with the total time that elapses during his or her employment. This alternative lessens the administrative
burdens of maintaining records of hours of service. It enables the employer to credit service from date of employment to date of severance
without counting hours of service completed during that time.

Line a. The employment commencement date must be no later than the date on which the employee first performs an hour of service for
the employer. The severance from service date is the earlier of the date an employee quits, retires, is discharged, or dies, or the first anni-
versary of the first day of a period of absence from service for any reason other than quitting, retiring, discharge, or death. The employee
must be credited with a period of service equal to at least the time between the employment commencement date and the severance
from service date.
1.410(a)-7(b)

Line b. Generally, a plan must aggregate all separate periods of service, except any that may be disregarded because of the rule of
parity. (See III. h.) Alternatively, instead of keeping separate periods of service, the plan may aggregate by adjusting the employment
commencement date. If the plan used the alternative to credit the aggregate period of service, check Yes for question b.
1.410(a)-7(b) (6) (ii)
1.410(a)-7(b) (2) (iv)

Line c. A period of severance is the time between the employee’s severance from service date and the date the employee again performs
an hour of service for the same employer.

If an employee severs from service by quitting, being discharged, or retiring, and then performs an hour of service within 12 months of the
severance from service date, the plan must consider the period of severance as a period of service.

Also, if an employee severs from service for any reason other than quitting, being discharged, or retiring, and within the next 12 months or
less quits, is discharged, or retires and then performs an hour of service within 12 months of the date on which he or she was first absent
from service, the plan must consider that period of severance as a period of service.
1.410(a)-7(c) (2) (iii)

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Line d. When a plan has a service requirement and uses the elapsed time method of crediting service, an employee must be considered
to have satisfied that requirement as of the date he or she has credit for a period of service equal to the requirement. All periods of service,
except those disregarded due to the rule of parity, must be aggregated. Certain periods of severance must be considered as periods of
service (see question c) when determining this eligibility date.

Section I deals with the date an employee must begin participation in these situations.
1.410(a)-7(c) (2)

Line e. The break in service rules allow a plan to disregard certain service before the employee has a break. If all of an employee’s
service with an employer is counted for participation, the break in service rules need not be provided by the plan. In this case, check
N/A for questions e. through h. of the worksheet. If a plan uses elapsed time substitute “1-year period of severance” for “1-year break
in service.” A 1-year period of severance is a 12-consecutive-month period beginning on the severance from service date and ending
on the first anniversary of that date provided that within this period the employee does not perform an hour of service for the employer
maintaining the plan.
1.410(a)-7(c) (4)

Line f. An individual shall not incur the first 12-month period of severance that would otherwise be counted if severance is due to maternity
or paternity leave. Such 12-month period is neither counted as a year of service nor as a period of severance. Maternity or paternity leave
is a period an individual is absent from work by reason of 1) pregnancy of the individual, 2) birth of the child of the individual, 3) placement
of a child with the individual for adoption or 4) caring for a child described in (2) or (3).

Credit for maternity or paternity leave is required only if such leave is on account of the reasons described above. Thus, if an individual
quits employment with employer A and two years later adopts a child, no credit under this provision could be given if the individual even-
tually returns to work for employer A because such individual’s absence from employer A’s workplace is on account of quitting and not on
account of the adoption of or the caring for the child immediately following the adoption.

If an individual works until July 1, 1986, is first absent from employment on July 1, 1986 on account of maternity or paternity leave, and
on July 1, 1989 performs an hour of service, the period of service must include the period from the employment commencement date until
June 30, 1987 (one year after the date of separation for a reason other than an employee quitting, retirement, discharge or death). The
period from July 1, 1987 to June 30, 1988 is neither a period of service nor a period of severance. The period of severance would be from
July 1, 1988 to June 30,1989.
410(a)(5)(E)
1.410(a)-9

Lines g. and h. In general, an employee’s service before a 1-year period of severance is not required to be credited until the employee
completes a 1-year period of service after the period of severance. The rule of parity applies to employees who are not vested. If a partici-
pant with no vested interest has a 5-year or more period of severance, service before the severance need not be counted for participation
if the period of severance equals or is more than the aggregate periods of service before the break. The period of service completed
before the period of severance does not include service that need not be counted because of earlier periods of severance.

When service before a 5-year or more period of severance must be taken into account after a 1-year period of service, an employee who
meets the plan’s eligibility requirements and has a 1-year period of severance need not be credited with pre-break service until he or
she completes a 1-year period of service after severance. However, at that time the employee would be required to participate under the
plan retroactively. The following examples illustrate this rule:

Example 1.

A calendar year plan provides that an employee may enter the plan only on the first semi-annual entry date, January 1, or July 1, after
satisfying minimum age and service requirements. Employee C, after 10 years of service, separated from service in 1976 with a vested
benefit. On February 1, 1990, C returns to employment covered by the plan and completes a 1-year period of service. C must partici-
pate either immediately on returning or, after a 1-year period of service, retroactively to February 1, 1990. C’s prior service cannot be
disregarded because of the vested benefit C had when separating from service. Therefore, the plan may not postpone participation
until July 1, 1990.

Example 2.

A defined contribution plan has a 1 year service requirement for participation, and no age requirement. Contributions and allocations
are made for eligible employees on December 31. An employee is hired on January 1, 1985, and separates from service without a
vested interest on June 30, 1987. The employee returns on July 1, 1990, after a 3-year period of severance. Under the break in ser-
vice rules, the plan provides that the employee must complete a 1-year period of service after returning before the 2½-year period of
pre-break service is credited. Therefore, no contribution need be made on the employee’s behalf on December 31, 1990, because the
employee is not eligible to participate at that time. On June30, 1991, the employee completes a 1-year period of service and is credited
with the pre-break service and must participate retroactively from July 1, 1990 because the period of severance is less than 5 years. If
this employee is not covered on December 31, 1990, the waiting period is longer than the maximum allowed, taking into account the
pre-break period of service.

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CYCLE A Submission Period – 02/01/2016 – 01/31/2017

Employee Benefit Plan

Minimum Participation Standards
(Worksheet Number 1 – Determination of Qualification)
Instructions – All items must be completed. A “Yes” answer generally indicates a favorable conclusion is warranted, while a “No”
answer indicates a problem exists. Please use the space on the worksheet to explain any “No” answer. See Publication 6388,
Explanation Number 1, for guidance in completing this form.
The technical principles in this worksheet may be changed by future regulations or guidelines
Name of plan

I. Age of Service Plan Reference Yes No N/A
a. Does the plan provide an age or service requirement (including an entry date
requirement) for participation?
b. Does the plan meet the minimum age and service requirements of Internal Revenue
Code section 410(a)(1) as amended by the Tax Reform Act of 1986? [140]
c. Will a new employee, otherwise eligible, participate on the earlier of the first day of
the plan year after meeting the minimum age and service requirements of Code
section 410(a)(1), or 6 months after satisfying the requirement? [104]
d. Is an employee's eligibility to participate determined without regard to the attainment
of any maximum age? (See Publication 6388, Explanation Number 1, regarding the
effective date of this requirement). [105, 106]
II. Years of Service Plan Reference Yes No N/A
(Complete only if years of service and breaks in service are based on hours of service)
a. Does the plan designate an "eligibility computation period"? [111]
b. Is an employee required to complete no more than H hours of service during the
"eligibility computation period" to be credited with a year of service? [112]
c. Does the plan credit hours of service in accordance with Department of Labor (DOL)
Regulations? [113]
d. If the plan credits hours of service for periods of time during which no duties are
performed, does the plan incorporate, in its own words or by reference, the rules for
determining and crediting those hours? [114]
e. Is the initial eligibility computation period used to determine if the participant has a
year of service for eligibility purposes defined as the 12-consecutive-month period,
figured with reference to the employee's employment commencement date? [115]
f. If the plan uses the plan year as the computation period to measure years of service
for purposes of eligibility after the first computation period, does the first
computation period include the first anniversary of the employment commencement
date? [116]
g. Is a "break in service" defined as an eligibility computation period when the
employee is not credited with more than B hours? [117]
h. Is the eligibility computation period for determining a break in service the same as is
used to figure a year of service for eligibility? [118]
i. Does the plan credit hours of service to the appropriate computation period to avoid
Thisa break in serviceformfor employeesisonprovidedmaternity or paternity leave? [119]as an example only and should not be
j. When an employee has a vested benefit, does the employee participate
completed or returned to the Internal Revenue Service.
immediately on returning to work after a break in service? [120]
k. When an employee who has satisfied the minimum service requirement and who
has no vested benefit has a break in service, and the number of consecutive breaks
in service is less than the greater of 5 or the number of years in which the employee
attained a year of service, does the employee participate immediately upon
returning to work? [121]
Form 5622 (Rev. 4-2016) Catalog Number 42697Z publish.no.irs.gov Department of the Treasury - Internal Revenue Service

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Page 2 CYCLE A Submission Period – 02/01/2016 – 01/31/2017
III. Years of Service and Breaks in Service Based on Elapsed Time Plan Reference Yes No N/A
(Complete only if years of service and breaks in service are based on elapsed time)
a. Does the plan credit an employee with a period of service, beginning no later than
the employment commencement date and ending no sooner than the severance
from service date? [131]
b. Does the plan determine an employee's total period of service by aggregating all
individual periods, unless the periods of service may be disregarded under the rule
of parity? [132]
c. In determining an employee's period of service, does the plan take into account the
service spanning rules? [133]
d. If a plan contains a service requirement for initial eligibility to participate, does an
employee satisfy this service requirement as of the date the employee completes a
period of service equal to the period required? [134]
e. Is a 1-year period of severance defined as a 12-consecutive-month period
beginning on the severance from service date and during which the employee does
not perform an hour of service for the employer? [135]
f. Is the first period of severance ignored to the extent that such period is attributable
to maternity or paternity leave? [141]
g. When an employee has a vested benefit, does the employee participate
immediately on returning to work after 1-year period of severance? [137]
h. When an employee who has no vested benefit has a 1-year period of severance,
and the period of severance is less than the greater of 5 years or the prior period of
service, does the employee participate immediately on returning to work? [138]

This form is provided as an example only and should not be

completed or returned to the Internal Revenue Service.

Form 5622 (Rev. 4-2016) Catalog Number 42697Z publish.no.irs.gov Department of the Treasury - Internal Revenue Service

- 10 -

                                                                                  CYCLE A Submission Period – 02/01/2016 – 01/31/2017
                             Employee Plan Deficiency Checksheet
                                    Attachment Number 1
                           Minimum Participation Standards
For IRS Use                  Please furnish the amendment(s) requested in the section(s) checked below.
     140      Section         of the plan should be amended to comply with the minimum age and service requirements
     I.b.     of IRC section 410(a)(1) and Regs. sections 1.410(a)-3, 1.410(a)-3T and 1.410(a)-7(c).
     104      Section         of the plan should be amended to provide that once an employee, otherwise eligible, meets
     I.c.     the statutory age and service requirements, the employee will participate in the plan not later the earlier of the 
              first day of the first plan year after such employee has met the statutory requirements, or 6 months after the day 
              such requirements are met. IRC section 410(a)(4) and Regs. sections 1.410(a)-4(b) and 1.410(a)-7(c)(3).
     105, 106 For plan years beginning on or after January 1, 1988, a plan may not exclude from participation on account of 
     I.d.     maximum age any employee with an hour of service on or after that date. For purposes of determining when 
              such an employee (who is not otherwise ineligible to participate) must become eligible to participate, service 
              credited to the employee in plan years beginning before January 1, 1988 must be taken into account.  An 
              employee who would be eligible to participate taking such service into account and whose entry date would be 
              before the first day of the first plan year beginning in 1988 must participate in the plan as of the first day of such 
              plan year. Section        of the plan should be amended accordingly. IRC section 410(a)(2) as amended by 
              section 9203(a)(2) of Pub. L. 99-509 and Proposed Regs. section 1.410(a)-4A.
     111      For purposes of eligibility to participate, section                  of the plan should be amended to specify the
     II.a.    computation period to be used for determining years of eligibility service. DOL Regs. section 2530.200b-1(a) 
              and 2530.202-2.
     112      Section         of the plan should be amended to credit an employee with a year of service for eligibility
     II.b.    purposes if the employee completes at least 1,000 (870 or 750) hours of service in an eligibility computation 
              period. IRC section 410(a)(3)(A) and DOL Regs. sections 2530.200b-1 and 2530.202.
     113      Section         of the plan should be amended to define the term hour of service to comply with DOL
     II.c.    regulations. Such definition should include a statement regarding the computation period to which hours of 
              service will be credited. DOL Regs. sections 2530.200b-1, 2530.200b-2 and 2530.200b-3.
     114      Section         of the plan should be amended to provide, either in its own words or by reference to
     II.d.    appropriate DOL regulations, credit for hours of service for periods of time during which no duties are 
              performed. DOL Regs. sections 2530.200b-2 and 2530.200b-3.
     115      For purposes of eligibility to participate, section                  of the plan should be amended to provide that the
     II.e.    initial eligibility computation period used to determine whether an employee completes a year of service will be a 
              12-consecutive month period beginning with the employment commencement date. DOL Regs. sections 
              2530.202-2(a) and (e).
     116      If the eligibility computation periods after the initial eligibility computation period are to be based on other than
     II.f.    anniversaries of employment, section                 of the plan should be amended to provide that such succeeding
              computation periods will begin with the plan year which includes the first anniversary of an employee's 
              employment commencement date, in which case an employee will be credited with a year of eligibility service in 
              each computation period that the employee completes at least 1,000 (870 or 750) hours of service. IRC section 
              410(a)(3)(A).
     117      For purposes of eligibility to participate, section                  of the plan should be amended to define a break in
     II.g.    service as the eligibility computation period during which the employee fails to complete more than 500 (435 or 
              375) hours of service. DOL Regs. section 2530.200b-(a)(1).
     118      To apply the break in service rules, section         of the plan should be amended to provide that the
     II.h.    computation period used for measuring eligibility service will also be used to measure breaks in service. DOL 
              Regs. section 2530.200b-4(a)(2).
     119      Section         of the plan should be amended to provide that an individual shall be credited with certain 
This form is provided as an example only and should not be 
     II.i.    hours of service during the appropriate computation period to avoid a break in service if such individual is 
              absent from work for any period by reason of: 
     completed1) pregnancy of theorindividual,returned to the Internal Revenue Service.
                        2) birth of a child of the individual, 
                        3) placement of a child with the individual in connection with an adoption, or 
                        4) caring for a child described in (2) or (3) immediately following such birth or placement. 
              IRC section 410(a)(5)(E).

Form 6040 (Rev. 4-2016) Catalog Number 43034U                  publish.no.irs.gov Department of the Treasury - Internal Revenue Service

- 11 -

Page 2                                                             CYCLE A Submission Period – 02/01/2016 – 01/31/2017
       120    Section           of the plan should be amended to provide that a vested participant, or a nonvested participant
       II.j.  whose prior service cannot be disregarded under IRC 410(a)(5), who is reemployed after a break in service 
              (period of severance), will either participate immediately on his or her reemployment commencement date or 
              retroactively as of his or her date of reemployment upon completion of a year of service measured by his or her 
              reemployment commencement date. IRC sections 410(a)(5)(C) and (D) and Regs. sections 1.410(a)(5) and 
              1.410(a)-7(c)(5).
       121    Section           of the plan should be amended to provide that a vested participant, or a nonvested participant
       II.k.  whose prior service cannot be disregarded under IRC 410(a)(5), who is reemployed after a break in service 
              (period of severance), will either participate immediately on his or her reemployment or retroactively, as of his or 
              her date of reemployment, upon completion of a year of service measured by his or her reemployment 
              commencement date. IRC sections 410(a)(5)(C) and (D) and Regs. section 1.410(a)-4.
       131    Section          of the plan should be amended to credit an employee with a period of service, commencing
       III.a. no later than the employee's employment commencement date and ending no earlier that the severance from 
              service date. Regs. section 1.410(a)-7(c).
       132    Section           of the plan should be amended so that an employee's total period of service is determined by
       III.b. aggregating all individual periods of service, unless such periods of service may be disregarded under the rule 
              of parity. Regs. sections 1.410(a)-7(b)(6)(ii) and 1.410(a)-7(c)(2)(iv).
       133    Section           of the plan should be amended so that, in determining an employee's period of service, the 
       III.c. plan takes into account the service spanning rules. Regs. section 1.410(a)-7(c)(2)(iii).
       134    When a plan has a service requirement and uses the elapsed time method of crediting service, an employee 
       III.d. must be considered to have satisfied that requirement as of the date he or she has credit for a period of service
              equal to the requirement. Section          of the plan should be amended accordingly. See Regs. section
              1.410(a)-7(c)(2).
       135    Section           of the plan should be amended to define a one year period of severance as a 12-consecutive
       III.e. month period beginning on the severance from service date during which the employee does not perform an 
              hour of service for the employer. Regs. section 1.410(a)-7(c)(4).
       141    Section           of the plan should be amended to provide that an individual should not incur the first 12
       III.f. month period of severance that would otherwise be counted if said period is attributable to maternity or paternity 
              leave. IRC section 410(a)(5)(E) and Regs. section 1.410(a)-9.
       137    Section           of the plan should be amended to provide that a vested participant, or a nonvested participant
       III.g. whose prior service cannot be disregarded under IRC 410(a)(5) who is reemployed after a break-in-service 
              (period of severance), will either participate immediately on his or her reemployment commencement date or 
              retroactively as of his or her date of reemployment upon completion of a year of service measured by his or her 
              reemployment commencement date. IRC sections 410(a)(5)(C) and (D) and Regs. sections 1.410(a)-4, 1.410
              (a)-7(c)(5), and (6).
       138    Section           of the plan should be amended to provide that a vested participant, or a nonvested participant
       III.h. whose prior service cannot be disregarded under IRC 410(a)(5), who is reemployed after a break-in-service 
              (period of severance), will either participate immediately on his or her reemployment commencement date or 
              retroactively as of his or her date of reemployment upon completion of a year of service measured by his or her 
              reemployment commencement date. IRC sections 410(a)(5)(C) and (D) and Regs. sections 1.410(a)-4, 1.410
              (a)-7(c)(5), and (6).

This form is provided as an example only and should not be 

       completed or returned to the Internal Revenue Service.

Form 6040 (Rev. 4-2016) Catalog Number 43034U   publish.no.irs.gov         Department of the Treasury - Internal Revenue Service

PDF file checksum: 249504170

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