Guest EDSAADE Posted July 9, 2003 Posted July 9, 2003 QUESTION Can a 401 (k) plan be amended prospectively to exclude a class of employees that already have participation in the plan? For example, the current plan has no class exclusions. Effective August 1, 2003, the employer wishes to amend the plan to exclude "clerks." Currently, 5 clerks are eligible participants in the plan. Notwithstanding 410(b), is it possible to exclude the 5 participants with the amendment? I cannot find any cite prohibiting from doing so.
Blinky the 3-eyed Fish Posted July 9, 2003 Posted July 9, 2003 Yes. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
four01kman Posted July 10, 2003 Posted July 10, 2003 Generally, you can exclude a class of employees. Remember, you must not have a covered group that favors the HCE, so you must meet both 401(a)(4) and 410(b). Jim Geld
Blinky the 3-eyed Fish Posted July 10, 2003 Posted July 10, 2003 Excluding a class of employees is only a coverage issue in of itself. 4o1k, I am not sure where you are coming from in its affect of 401(a)(4), other than now you will have a some zeroes in the testing. But it wouldn't suddenly cause a safe harbor design to no longer be the case. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
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