Safe Harbor 401(k) and Seasonal Employees

[Guest Gibson]

It is my understanding that a safe harbor 401(k) plan is prohibited from requiring 1000 hours and employment on the last day of the year. What if a large number of employees are seasonal, however? Is there any exception for this?

[MWeddell]

One may exclude from eligibility for the plan employees who have not yet earned 1 year of service (which may be defined as 1,000 hours or more during first year of employment or subsequent plan years). Alternatively, one may allow employees with < 1 year of service into the plan but give them no match or a reduced match.

Once the seasonal employees earn 1 year of service, they must receive the safe harbor match. You're right -- there is no exception for seasonal employees and you can't require 1,000 hours of service and/or employment on the last day of the plan year to receive each year's match.