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Student-Teacher Exclusion

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Rev. Proc.  2007-71 provided model plan language that may be used by public schools to satisfy the final 403(b) regulations plan document requirement. The student exclusion used in the Rev. Proc. was a "student-teacher" definition (see below in bold) and did not point to IRC 3121(b)(10).

There is no mention of student-teacher in the applicable IRC or Treasury reg. sections.

The pre-approved 403(b) document LRMs has the following exclusion: " Employees who are students performing services described in section 3121(b)(10) of the Internal Revenue Code." (This language is being used by several 403(b) pre-approved document providers.) There is no mention of student-teachers.

For those plans that used the IRS 2007 Model document language would you use the pre-approved LRM student 3121(b)(10) exclusion or write in the student-teacher definition from Rev. Proc.  2007-71?


Section 2 Participation and Contributions

 2.1  Eligibility.  Each Employee shall be eligible to participate in the Plan and elect to have Elective Deferrals made on his or her behalf hereunder immediately upon becoming employed by the Employer.  However, an Employee who is a student-teacher (i.e., a person providing service as a teacher’s aid on a temporary basis while attending a school, college or university) or who normally works fewer than 20 hours per week is not eligible to participate in the Plan.  An Employee normally works fewer than 20 hours per week if, for the 12-month period beginning on the date the employee’s employment commenced, the Employer reasonably expects the Employee to work fewer than 1,000 hours of service (as defined under section 410(a)(3)(C) of the Code) and, for each plan year ending after the close of that 12-month period, the Employee has worked fewer than 1,000 hours of service.   Note: This model language assumes that the plan has immediate eligibility, that the plan is limited to pre-tax elective deferrals, and that the plan has no matching or other employer non-elective contributions.  

 The model language in Section 2.1 also assumes that employees who normally work fewer than 20 hours per week or who are student-teachers are not eligible.  Either of these exclusions may be deleted on a uniform basis for all employees.  If this model language is used by a § 501(c)(3) employer that is not a public school and the plan is subject to ERISA, the plan should delete the exclusion for employees who normally work fewer than 20 hours per week.

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