Irrevocable Waiver

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It is my understanding that if a participant signs an irrevocable waiver they are still included in the general non-discrimination test of 401(a)4 just as they would be included in the 410(B) coverage test. Can someone give me the cite reference for this regulation?

[jaemmons]

If an employee timely signs an irrevocable waiver to participate in a plan sponsored by the employer, they are not treated as an eligible employee for all plan purposes. As such, they are not counted in the adp,acp or 401(a)(4) testing.

See Regulation 1.401(k)-1(g)(4)(ii)

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Here is the reg:

"(ii) Certain one-time elections.--An employee is not an eligible employee merely because the employee, upon commencing employment with the employer or upon the employee's first becoming eligible to make a cash or deferred election under any arrangement of the employer, is given the one-time opportunity to elect, and the employee does in fact elect, not to be eligible to make a cash or deferred election under the plan or any other plan maintained by the employer (including plans not yet established) for the duration of the employee's employment with the employer. This rule applies in addition to the rules in paragraphs (a)(3)(iv) and (a)(6)(ii)© of this section relating to the definition of a cash or deferred election. In no event is an election made after December 23, 1994 treated as a one-time irrevocable election under this paragraph if the election is made by an employee who previously became eligible under another plan (whether or not terminated) of the employer."

I speak English so I can't see how this reg says that a participant is not included in the 401(a)(4) with a zero EBAR. If you do not mind I would appreciate further explanation.

[jaemmons]

I now see your point. My confusion comes from the 401k regulations containing a definition of "eligible employee" which does not include employees who sign timely irrevocable waivers to participate. As such, I have treated them as excludable for purposes of coverage under 401k, 401m and any other employer contribution.

After rereading over and over again the regulations under 401a4, I am going to have to concede that my opinion is an incorrect interpretation. Therefore, would you agree that although they can be excluded for purposes of coverage for deferrals and match, that they are treated as non-excludable and not benefiting for purposes of nonmatch related employer contributions? Thanks for the clarification. I guess if enough of my industry peers hammer it home, it makes sense.

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Yes, I would agree 100%.