Exclusions

[Coleboy1]

We are in the process of taking over a 401(k) SH Plan. The adoption agreement from the current TPA is showing this under eligibility exclusions:

Has anyone else come across this? It's rather concerning.

 

[Paul I]

This looks like a creative attempt to incorporate the original Long Term Part Time rules into the document. Hopefully, they did not get too creative elsewhere in the document and create rights to benefits for part timers that the plan sponsor didn't want.

In my experience, long entries in the blank lines in the Adoption Agreement available when "Other" is checked or "Describe" is available all to often have lead to operational errors.

Assuming you are replacing the document, use the opportunity to clean it up.

[RatherBeGolfing]

It sounds like they are trying to say that Part-Time Employees are excluded, but a PTE that works 1,000 hours in the first year or 500 hours in 3 consecutive years will not be excluded.  

My concern with this language is that the 1,000 hours is limited to the first year and the 500 hours for LTPTE is 3 consecutive years which was later changed to 2 consecutive years.  Is it also applied to all contributions?  Is there another provision limiting LTPTEs to deferrals?  

[CuseFan]

Exactly. Also, a person who works <1000 in first 12 months but >1000 in next computation period (as plan defines) should participate on next entry date, but the language as crafted would exclude that person, impermissibly. Find out exactly what the plan sponsor is looking to accomplish, reconcile that with the law, and then clean up the language for them.