valid exclusion

[k man]

plan sponsor does not want any new participants right now. is there any way to exclude all new hires until they exceed 30% of the workforce? i dont believe this is a valid exclusion.

[mbozek]

If this is a individually designed plan why not amend to limit eligibility as of a certain date, e.g. ,only employees hired prior to Sept 1, 2004 are eligible to particpate and wait until the ineligible group exceeds 30% of workforce when the plan can be opened to new members. Need to avoid violating the 410b requirements on a operational basis. If this a ptype see if there is a write in option to define eligible employees as described above.

[k man]

so the following is valid? "only employees hired prior to September 1, 2004. it just bothers me for some reason.

[Blinky the 3-eyed Fish]

It's valid. I recall responding to a post previously to this question, so I know that this type of exclusion is stated specifically in the 410 regs somewhere.

[Guest DWL]

Maybe a 410(a) problem? Haven't done the research, but that's where I'd start.

[mbozek]

What is the 410(a) problem?

[Guest DWL]

The concern would be whether limiting eligibility to those hired before a certain date is a service-based eligibility criterion that exceeds the one-year limit (or two years with immediate vesting).

[Blinky the 3-eyed Fish]

I found the prior post

http://benefitslink.com/boards/index.php?s...&hl=eligibility

Note the cite is 1.410(a)-3(e)(1) - example 6