Can I restrict participation to employees who have worked 2 years with a minimum of 1,000 hours to qualify for a year?
A 401k plan may require up to one year of service before allowing employees to make elective contributions. [Treas. Reg. Sec. 1-401(k)-1(e)(5)]. (You may also require a minimum of 1,000 hours to qualify for a year.) If a 401k Plan also provides for employer contributions, employees can be required to complete up to two years of service before becoming entitled to receive those contributions. In that case however, the law requires employees to be 100% vested in their accounts attributable to employer contributions. [I.R.C. Sec. 410(a)(1)(B)(i)].
Related Questions
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- Can I restrict participation to employees who have worked 2 years with a minimum of 1,000 hours to qualify for a year?
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