carving out class based on tenure

[k man]

can an employer exclude employees from plan based on duration of service. for example the employer wants to allow only lawyers with the firm for 5 years to participate in the plan. the eligibility will not be 5 years. just for this class they cant participate unless they have a certain seniority.

[mbozek]

Plan cannot exclude employees using a clasification that has the effect of an age or service requirement in excess of 410(a)- age 21/ 1 yrs of svc. see reg. 1.410(b)-3(e). Need to find some other classification method to exclude these people, geographic, work group, etc.

[k man]

i think your citation to the regs might be incorrect. i dont see a subpart (e).

but does it have the same effect as an age and service. they would be permitted to participate if they were secretarys or paralegals. just lawyers have to be employed for 5 years.

[mbozek]

Should be 1.410(a)-3(e). See example 1. Reg-3(a) says that the plan cannot require that an employee complete a period of service in excess of 1 year as a condition for participation.

[Blinky the 3-eyed Fish]

I agree with mbozek.

Kman, to your question, they are only ineligible because they aren't there 5 years. Other lawyers there 5 years are eligible. That is a service condition a clearly as can be.

[four01kman]

May be able to do it if all such lawyers are HCE, therefore no discrimination in favor of highly paid

[mbozek]

410(a) does not have an exception that allows discrimination against HCE in eligibility to participate. It requires participation after age 21 and 1 yr for any one otherwise eligible.

[Effen]

I have seen law firms exclude "Associates" or "Junior Partners". Maybe bring them in at a much lower level.

If they are good lawyers, they should be able to come up with a creative solution.

[k man]

we have tons of plans where we exclude based on job classification. this one does not fit into that kind of format.

[david rigby]

If they are good lawyers, they should be able to come up with a creative solution.

Heh heh. Don't you just love giving advice to attorneys.