Exclude from Match

[cdavis25]

A 403(b) plan has a discretionary match.  The match goes to all.  They want to write the formula for the match to give 3% to anyone that defers and works over 25 hours per week only.  Is that ok assuming it passes 410(b) coverage via the ratio test?  I was thinking the 25 hours per week would not be allowed because it would require someone to work over 1,000 hours per year to receive a match.

[hr for me]

I see different issues in that formula...(even just the calculation/definition of who works over 25 hours per week). 

Is there going to be some type of trueup (due to averages)  or are they saying they want it to be specific by workweek?  Payroll calculations could be a nightmare and lead to many mistakes if they are relying on the timeclocks and later edits (ex, forgot to clock in and just added those hours to the next week which threw the 2nd week over 25 even though neither really had 25 OR issues with unknown possible OT and the > 1000 hours you mentioned)

[Carol V. Calhoun]

Section 410(a)(1) sets forth the minimum age and service requirements.  In general, a plan cannot require, as a condition of participation, that an employee complete a period of service with the employer extending beyond the later of:

• the date on which the employee attains age 21; or
• the date on which the employee completes one year of service.

This is separate from the 410(b) requirements.  So if an employee gets over 1,000 hours in a year, they cannot be excluded from the match, even if the 410(b) requirements would be satisfied even if they were excluded.