Excluding class of employees

[Brian Gallagher]

I have a plan that wants to exclude a particular group of employees, say the employees of office A. As of now, everyone in office A is eligible to participate, and roughly 75% of them do.

What the company wants to do is exclude the employees in office A, but let the ones already contributing to continue, therefore making the non-deferring, and future employees not eligible for the plan.

That can't be right. Right?

[ccassetty]

I don't think they can exclude employees on the basis of currently making deferrals or not currently making deferrals (if an employee is eligible to make deferrals, he or she is already participating). For one thing this would violate the requirement that no other benefits than match can be based on whether an employee is making deferrals. The exclusion would have to be based on some other business aspect. i.e. office v. shop, div A v. div B, delivery v. manufacture, etc.

Have you checked to see how the plan fairs in the non-discrimination testing with all of the office A employees excluded?

Then of course there is the perennial favorite: Why are they doing this?