excluding hourly employees and HCE's. different opinions, who's right

[Guest Greg W]

I have a problem. In my firm there seems to be some differing opionions on this matter. We have a 401k plan (9-30pye) that amemded on 7-1 to exclude hourly employees and HCE's. Some administrators are now saying that previously eligible ee's (who have not deferred into the plan) are now ineligible. I say no way. Once you meet eligibility you are in, whether you participate or not and all new hires going forward can be excluded if the they meet the exclusion requirements. I haven't been able to find anything concrete one way or the other. Who do you think is right?

[WDIK]

How was the amendment drafted?

[rcline46]

If you amend a plan to now exclude union ees, are those already there in or out?

And yes, how was the amendment drafted?

Our docs specifically mention moving to an ineligible class so the doc anticipates such an amendment.

[Guest Greg W]

Here is a copy of the amendment.

Summary of Modification:

The following change has been made to ABC., Inc. 401(k) Profit Sharing Plan and Trust:

Previously, if you were a member of a class of employees identified below, you were an Excluded

Employee for purposes of eligibility to participate in the Plan. The Excluded Employees were:

• employees whose employment was governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, unless such agreement expressly provided for participation in this Plan.

• certain nonresident aliens who had no earned income from sources within the United States.

• employees who were previously not treated as employees of the Employer but who were reclassified as being employees.

Effective July 1, _____, if you are a member of a class of employees identified below, you are an Excluded Employee for purposes of eligibility to participate in the Plan. The Excluded Employees are:

• employees whose employment is governed by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, unless such agreement expressly provides for participation in this Plan.

• certain nonresident aliens who have no earned income from sources within the United States.

• employees who were previously not treated as employees of the Employer but who are reclassified as being employees.

• Highly compensated Employees and hourly Employees.

This modification amends Article I in your Summary Plan Description.

[austin3515]

If you can terminate the Plan altogether why can't you kick a few people out?

[Blinky the 3-eyed Fish]

You absolutely can kick them out. Those that had an account balance will essentially move into entitled to future benefits group for purposes of the 5500 filing.

[Guest Greg W]

well I stand corrected. Thank you very much for the replies.