Christian Schools International

Scenarios Outlining the Issues and Solutions

Following are various scenarios outlining the issues and the solutions:

A school joins the plan on September 1 and later changes its contract year to an earlier date (i.e. August 1). In this situation, the school should report and pay contributions on twelve months of salary even though the school may pay more than twelve months of salary to their employees in the transition year. Because government regulations do not allow the Plan to grant more than twelve months of service in a year, this will keep the number of months for which service is earned equal to the number of months of salary for which contributions are made.

If a school made such a change in its contract year and contributions were submitted for more than twelve months of salary, please notify us. For affected participants, we can extend their eventual termination dates by the number of months needed to account for the extra contributions made.

In a similar scenario, a school may have changed its contract year from September 1, but continues to enroll new participants and reports salary changes as of September 1. Such schools should enroll new participants and report salary changes for all employees as of their contract year. When making this transition for existing employees, only twelve months of salary should be reported. Again, this will keep the number of months of service equal to the number of months of salary for which contributions are made.

Other issues can arise when a participant changes schools. A participant may be at a school that has a September 1 contract year and transfers to a school with an earlier contract year (i.e. August 1). For the month of August, the individual is employed at two schools. Again, to keep the number of months of service equal to the number of months of salary for which contributions are made, the new school should not contribute for the employee’s first month of employment.

In a reverse scenario, suppose an individual is at a school that has an August 1 contract year, terminates employment July 31, and transfers to a school that has a September 1 contract year. In this scenario, the participant will not contribute for the month of August in the termination year and will not receive service for that month, thus keeping the months of service earned equal to the number of months of salary for which contributions are made.

All of the above scenarios assume the participant is working full-time. Participants
working part-time receive partial service based on their percent of full-time worked.
For these participants, service in the transition month(s) can be combined as long as their
total service does not exceed full-time service for twelve months.

Full Issue: No. 164 - May 29, 2007

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