Jump to content

Universal Availability--403(b)(12)


Recommended Posts

We have a 403(B) client (a nursing association) that would like to exclude a group of employees from participating in voluntary salary deferrals under the 403(B) plan. These employees are called "temporary care-giver" employees and do "normally" work less than 20 hours per week (sometimes they don't work any hours for several weeks, then sometimes more than 20). They are nervous about the "universal availability rule," but it seems clear to me that they may be excluded as a class under 403(B)(12). How can I give them more comfort with their decision to exclude them? Can we "average" out their hours over the course of they year to support a "less than 20 hours per week" determination? I can't seem to find much guidance on this. Thanks.

LKP

Link to comment
Share on other sites

From informal conversations with people at the IRS, it appears that they are as a practical matter using 1,000-hour test, at least for those employees who remain with the employer for the entire year. This amounts to averaging out their hours over the course of a year. However, you would need to do that calculation on a per employee basis, rather than a group basis. Thus, if one employee in that class regularly works 25 hours a week, and one works 10, you cannot avoid coverage of the whole class because on average they work less than 20.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Thanks for your input! I am really pulling my hair out trying to find some guidance on this one! Attorney suggested looking at pre-ERISA explanation/guidance, since the "normally 20 hours per week" rule stems from that era. I am having difficulty finding any pre-ERISA guidance in this "up-to-the-minute" computer age . . . .

LKP

Link to comment
Share on other sites

Tell me about it! Most of my work is with governmental plans. And in a whole lot of areas, governmental plans are subject to pre-ERISA law. Managing to go back and research that law at this stage (much less apply it to a world that's changed a lot since 1974) is one of the challenges of my profession!

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...