Part-time employees

[Guest John Nelson]

Company employs many part-time employees who work less than 1000 hours during the year. If Company imposed a 1 year of service requirement for eligibility, none of these employees would ever become eligible. Here's the rub: The Company does not want to impose a service requirement under the 401(k) plan. They want to let their otherwise eligible employees participate immediately.

But, if we have to count all of these part-timers -- who will not participate -- in the 401(k) test, the Company's HCEs will not be able to make meaningful contributions.

Any thoughts on how we can exclude these part-timers and not have a service eligibility requirement under the plan?

Thanks for your help.

[Tom Poje]

test 'otherwise excludables' separately.

the part timers will always be in this group of employees as they will never work a year of service, so they will have no effect on your testing anyway.

But if the plan is top heavy, you have to provide a top heavy minimum as they are participants, which is neat cause they never work 1000 hours, so will never vest, so they simply build a balance that eventually will be forfeited.

[Brian Gallagher]

are these "part-timers" seasonal people, or people who work, say, 15 hrs a week?

also, if you have less than a year of service for eligibility, you can't impose an hours requirement (at least that's what i always assumed)

you can't exlude (as a class) who are part-time or seasonal, but can w/ an hours requirement (again, that's what i always assumed)