401k eligibility protected if going from full time to intern

[Guest JFTN]

Plan has no eligiblity requirement for deferrals. Entry is date of hire. Plan excludes interns from participation. If regular full time employee becomes intern, are they still eligible to defer?

[rcline46]

Once they become an Intern, they are in an excluded class and cannot defer. Neither can they take a distribution.

However, I find it curious that a full time would become an intern. On the surface it smells.

[Guest JFTN]

I'm glad you picked up on that; interns are actually the class of employees they are using when an employee moves from full time to part time. They of course cannot exclude part time, so they are reclassifying them as interns. They then sometimes become regular FTE's again. I've advised them they should stop doing this as it does smell.