Covered vs Non Covered Employment

[justatester]

Interesting question....

Effective 1/1/08 a plan was amended to exclude the following employees: “All Employees with the status code IPT (Interns/Interim employees who work on an as-needed or on-call basis).”

If I was originally a full time "regular" employee and had been an active participant in the 401(k) plan, I then move to an "on-call" status am I no longer allowed to participate in the plan? Or since I was once eligible than I am always eligible?

[JanetM]

If the plan was amended to exclude IPT employees then you would not be considered an eligible participant if your status changed. You would no longer be able to defer or receive ER contributions (if any).

[justatester]

ok, what if the classification of employees was stated like this..."Employees scheduled to work at least 35 hours per week" are eligible. If I start as one of these employees, but my status changes to "less than 35", I am no longer eligible correct?

[rcline46]

Invalid category. Cannot use an exclusion which is based on hours or age.

[Guest Sieve]

Bottom line: if eligibility is changed, and a participant no longer meets the new eligibility criteria--whatever thsoe criteria might be--then plan participation ends for those individuals unless the plan grandfathers those already eligible to participate at the time of the amendment. The anti-cutback rules do not apply to participation, so a grandfather provision regarding eligibility is discretionary.