A question about excluding participants from ACP Test.

[Guest]

A question about excluding participants from ACP Test.

Participant must have 1000 hours (no last day requirement) to receive a matching contribution. If I have participants (terminated or not) with less than 500 hours, can I exclude them from the ACP Test?

[Richard Anderson]

Unless the plan allows post-tax contributions, you would include in the ACP test only those participants who are eligible to receive an allocation of matching contributions under the plan rules. If the plan has a 1,000 hour requirement for the match, anyone with less than a 1,000 hours is not eligible for a match, therefore, they are not in the ACP test.

I would not call this "excluding" them; they are not part of the test.

If the plan also allows post-tax contributions; then the ACP test includes anyone eligible to make post-tax contributions or is eligible for a match.

[Guest]

Richard is correct. I would not use the term 'can' I exclude them. You simply do not include people who could not get a match in the test. (Of course, ees who defer 0 receive a match of 0 and are included)

and, just in case,

for 410b, the active ees who worked less than 1000 hours are included and not benefiting.