Universal Availability

[katieinny]

If I understand the Universal Availability rule, for employee elective deferrals, there can be no exclusion of certain classes of employees like in the 401(a) plan (for example, a 401(k) might exclude employees in Dept B as long as the plan passes coverage. A 403(b) plan can't do that.). The exclusions are limited to those listed in the regs.

But what about for employer contributions? Can different classes of employees be excluded from these contributions?

[Guest mjb]

employer contributions by NP are subject to the same nondiscrimination rules as there are for Qual plans under ERISA. Public employers and churches are exempt from the 410/401(a)(4) rules.

[katieinny]

So, even though a not-for-profit business must permit a certain class of employees to make elective deferrals, they can exclude that group from receiving employer contributions.

[jpod]

While you can exclude employees by groups (provided you comply with the coverage and nondiscrimination requirements), note that if it is an ERISA-governed 403b plan it must also comply with the Title I equivalent of IRC Section 410(a) (e.g., cannot require more than a "year of service" to be eligible for employer contributions).