Eligibility

[Guest Butterfly]

Generally speaking: I know you can't exclude employees from participation based on age and service. I know you can based on job category.

Can you pick certain employees hired on specific dates and say "anyone hired on October 3, 2007" (for example) is excluded from participation in the Plan?

Thank you for your help (anyone!)

[J Simmons]

You can impose minimum age (up to age 21 years) and minimum service (up to 2 years,a but if you impose more than 1 year, then you cannot impose any vesting requirements on what part of employer contributions that a terminated employee is allowed to take with them).

Excluding based on job category or those hired as of a certain date is trickier. There are limitations. One is minimum coverage rules. Counting those employees for testing, basically the percent of the non-highly compensated employees that do benefit must be at least 70% of the percent of highly compensated employees that benefit. (There is a much, much more complicated alternative.) Excluding employees by job category might make you fail minimum coverage.

Also, for excluding all employees hired on a certain date, you might want to check Treas Reg 1.401(a)(4)-5 and take whatever steps seem prudent not to cross the line there in general nondiscrimination.

If the job categories you exclude or those that are excluded by reason of being hired on a certain date have a significantly higher concentration of females, racial minorities, those of a certain religion or creed, disabled individuals than your employee pool at large, you might face Title VII or similar discrimination.