Employee Exclusion

[Guest moltengater]

Company has a defined benefit plan and a defined contribution plan (401(k)) stand alone. I do record-keeping for the 401(k) plan - they have a different TPA/Actuary work on the DB plan.

The company is excluding employees hired after 04-30-2006 from participation the DB plan. Therefore, they want to allow these employees to receive a match in the 401(k) plan.

They would have to amend the 401(k) for a match - which is fine - but they want to exclude any employee hired before 05-01-2006 from sharing in the match.

In essence, becuase they are excluding new hires from the DB they want them to be able to get a match - but becuase the old employees are still in the DB plan - they don't want them to get a match.

Can a plan exclude existing employees based on these circumstances? The plan is a prototype plan. Can I amend a prototype to "EXCLUDE EMPLOYEES HIRED BEFORE 05-01-2006?"

I am not worried about testing becuase they will be excluding all their HCE's - but can you exclude based on a service item such as above??

[Blinky the 3-eyed Fish]

Yes. In fact my vague recollection says this is an example in the 410 regs.

You can amend the prototype but if it's not one of the hard-coded options, you have turned it into an individually designed plan.