[Code of Federal Regulations]
[Title 29, Volume 9]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR2530.204-3]

[Page 462]
 
                             TITLE 29--LABOR
 
CHAPTER XXV--PENSION AND WELFARE BENEFITS ADMINISTRATION, DEPARTMENT OF 
                                  LABOR
 
PART 2530--RULES AND REGULATIONS FOR MINIMUM STANDARDS FOR EMPLOYEE PENSION BENEFIT PLANS--Table of Contents
 
          Subpart B--Participation, Vesting and Benefit Accrual
 
Sec. 2530.204-3  Alternative computation methods for benefit accrual.

    (a) General. Under section 204(b)(3)(A) of the Act and section 
411(b)(3)(A) of the Code, a defined benefit pension plan may determine 
an employee's service for purposes of benefit accrual on the basis of 
accrual computation periods, as specified in Sec. 2530.204-2, or on any 
other basis which is reasonable and consistent and which takes into 
account all covered service during the employee's participation in the 
plan which is included in a period of service required to be taken into 
account under section 202(b) of the Act and section 410(a)(5) of the 
Code. If, however, a plan determines an employee's service for purposes 
of benefit accrual on a basis other than computation periods, it must be 
possible to prove that, despite the fact that benefit accrual under the 
plan is not based on computation periods, the plan's provisions meet at 
least one of the three benefit accrual rules of section 204(b)(1) of the 
Act and section 411(b)(1) of the Code under all circumstances. Further, 
a plan which does not provide for benefit accrual on the basis of 
computation periods may not disregard service under section 204(b)(3)(C) 
of the Act and section 411(b)(3)(C) of the Code.
    (b) Examples. The following are examples of methods of determining 
an employee's period of service for purposes of benefit accrual under 
which an employee's period of service is not determined on the basis of 
computation periods but which may be used by a plan provided that the 
requirements of paragraph (a) of this section are met:
    (1) Career compensation. A defined benefit formula based on a 
percentage of compensation earned in a participant's career or during 
participation, with no variance depending on hours completed in given 
periods.
    (2) Credited hours. A defined benefit formula pursuant to which an 
employee is credited with a specified amount of accrual for each hour of 
service (or hour worked or regular time hour) completed by the employee 
during his or her career.
    (3) Elapsed time. See Sec. 2530.200b-9(e).