What is the equivalency method for determining eligibility?

The equivalency method for determining eligibility in a retirement plan context generally refers to a specific standard established for determining if employees meet certain criteria to participate. This method focuses on creating a predetermined threshold, such as a specific number of hours worked over a defined period, in this case, proposing a workweek of 45 hours.

By using a preset number of hours, the equivalency method allows employers to establish a clear guideline that can be consistently applied across the workforce. This can be particularly useful in organizations where varying work hours might make it more challenging to gauge regular participation based on average metrics. For example, rather than assessing eligibility based on highly variable actual hours worked, which could fluctuate widely, setting a fixed standard like 45 hours simplifies the determination process and helps ensure that employees who meet that standard are eligible for benefits. This approach thus aids in maintaining compliance and clarity in eligibility criteria.