N Can Interns and Other Employment Classes Be Excluded From Retirement Plan Participation, Including Eligibility To Receive Safe Harbor Contributions? By Lisa Haberman, Ed.D., ChFC, CLU, Ascensus Not everyone who participates in the workforce serves an employer on a permanent, full-time basis. Examples may include seasonal, contingent, parttime, or internship work relationships. Most qualified retirement plan documents allow an employer to tailor a plan to meet its specific needs, including defining the eligibility requirements for employees to enter and participate in the plan. Beyond statutory exclusions — certain nonresident aliens and union employees — and requiring that a plan’s age and service conditions be met, an employer may, under certain conditions, exclude specific business classes of employees — interns for example. The employer may do so if the classification to be excluded is reasonable and the plan meets coverage requirements under the ratio percentage test, or — if a classification is not considered “reasonable” — the plan can satisfy coverage requirements through the average benefits test. The plan document must also allow class exclusions, generally a non-standardized plan document. Importantly, “part-time” per se is generally not regarded as a permissible excludable employee class. While it may be possible to exclude a specific employee class for some or all benefits under a retirement plan, when it comes to 401(k) safe harbor benefits there are special rules. If a class of employees is eligible to make elective salary Colorado Banker 8
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