I have an employer that would like to establish a profit sharing plan and exclude all non-retiring employees. Basically they would like to only give contributions to employees that are retiring and have reached NRA. My initial thought is that this probably wouldn't be permitted as it may be seen to skirt the maximum age requirement of age 21. Any thoughts or other opinions?

Is the maximum age 21 something like the "part-time" employee exclusion? That is, can you specify a higher age but you must nevertheless take into account all those age 21 or older in your nondiscrimination and minimum coverage testing? I would doubt that only benefiting retiring employees (since presumably on the higher end of the pay scale at the company) would pass those tests.

It sounds more like a situation for a nonqualified plan than a qualified one.

Yes. That was my thought as well.

Pardon my idiocy, but what is a "non-retiring employee"?

You mean that is not crystal clear? They are wanting to give a one time contribution to an employee in his final year of employment. Basically a non-retiring employee would be one that is not age 65 and not retiring.

Why make it complicated. Just call it a bonus or something. If it is non qual plan then you have 409A issues. I don't see what motivates this.