Can you exclude employees under Title V?

[pbarrett]

We have a 501© Not for Profit Organization that wants to establish a 401(k)/PS plan. They have about 80 employees. We have been told that they pay all 80 employees are paid by the organization via check check (reported on W2); however, appx 10 employees fall under the Title V category and their compensation is reimbursed by the government. I am not familar with Title V rules. Any problem allowing these employees to participate in the plan if they meet the eligibility requirements?

Any info would be appreciated.

[Guest mkimball]

I would think that where the funds come from to "reimburse" your client for employees' wages does not matter. As long as they do get paid, get a W-2 and perform services for your client, then they are an employee and can participate.

[rcline46]

You may want to check the actual 'status' of the employees. According to my clients with Title V employees, the employees are placed with the company by the government and are actually working for the feds, not the company. Their atty said they are NOT employees even tho they are receiving W-2 from the employer.