STATUTORY EXCLUSIONS

[Guest CAM223]

A plan has a 6 month eligibility requirement with no hours therefore part-time employees are eligible to participate after fulfilling the 6 month requirement.

In excluding employees who are statutory exclusions in the plan test, are we limited to excluding those employees who have worked less than 12 months of service or can we exclude longer sevice employees who have never worked more than a few hundred hours in any year?

[jaemmons]

Generally, any employee who does not meet the requirements contained in IRC 410(a)(1)(A) would be treated as a "statutory exclusion" and tested separately from the other participants.

A year of service is defined in IRC 410(a)(3). If an employee has never been credited with 1,000 hours in any 12 month period (as defined by the plan document) they would be treated as a statutory exclusion under the aforementioned IRC section.

[E as in ERISA]

I assume that you are doing ADP testing and are using the alternative where you don't include otherwise excludable employees in the test?