Eligibility requirements for 401k

[Pammie57]

Is there anything that prevents a plan sponsor from Lowering the age requirement to age 14?  I know max is 21.  He wants to let his kid participate...not sure he'd work 1000 hours but I guess if he changes it to NO eligibility  requirements -....as long as every employee is treated the same - can he do this?

[Bird]

It's ok

[Bill Presson]

As Bird said, it's ok. But I think it's silly. Are there really some 13 year old kids they need to exclude? Just eliminate the age requirement. Usually the 18 & 21 ages are there to exclude high school and college summer help or interns. Not sure an age 14 eligibility requirement accomplishes anything.

[Patricia Neal Jensen]

I would eliminate the age requirement.  Having an age as low as 14 invites an auditor to ask for proof that this child actually works there.  Why raise this issue?

[RatherBeGolfing]

On 8/26/2020 at 1:03 PM, Bill Presson said:

Are there really some 13 year old kids they need to exclude?

 

12 hours ago, Patricia Neal Jensen said:

I would eliminate the age requirement. 

This

[MWeddell]

If the owner's child is an HCE through family attribution, the timing of the amendment may be discriminatory under the 401(a)(4) regulations.

[BG5150]

1 hour ago, MWeddell said:

If the owner's child is an HCE through family attribution, the timing of the amendment may be discriminatory under the 401(a)(4) regulations.

So the kid isn't able to participate unless they hire someone else under age 21?

I would think it would be discriminatory if the reduced the age for 2020 and reinstated age 21 next year.

[MWeddell]

I'm raising it as a possible issue under Treas. Reg. Section 1.401(a)(4)-5 if the owner's child is an HCE.  Arguably, the amendment is being made when the only person expected to benefit from it is an HCE. 

I'm not resolving the issue.

[Mike Preston]

Standing alone the amendment should be fine. It could be part of a pattern of amendments that are discriminatory if the eligibility was changed next year to exclude NHCE's of a similar age. I wouldn't worry about it.