Exclude Temporary Employees

[austin3515]

Is it ok to exclude someone whose employment with the employer is "temporary" without including the fail-safe statutory eligibility? (we're not talking about a temp agency here or employee leasing).

so plan has immediate eligibility, but these employees are expected to work for just a 3 year special project and then be done. So they would meet statutory eligibility but by contract their employment is just 3 years.

I know this has been discussed here before as to whether or not this is considered a service based exclusion in violation of 410(a). If anyone has the link handy, I would appreciate it. I couldn't find it...

[John Feldt ERPA CPC QPA]

I didn't find the link, but if the plan can pass coverage without them, I think you'll need to find another way to exclude them, such as by job title or other classification perhaps based on that special project. If you can pass coverage using the 70% test, then you could exclude by name, but that would not be logistically practical.

Otherwise, the temporary employee exclusion provision will only exclude them for a short time, meaning they will be eligible, even if they are a temp/part-time/seasonal employee, after they compete a year of service (2-years if the plan has a 2 years of service entry requirement).

[BG5150]

I would think you could get by, like John said, by job classification. To me, it's a valid business classification.

[KJohnson]

http://www.irs.gov/pub/irs-tege/qab_021406.pdf