Depending on your company's specific 401k plan, there are certain qualifications that an employee must meet in order to be eligible to participate in the plan.
When all eligibility requirements are met, an employee can start contributing funds to their 401(k) account.
Examples of Eligibility
A plan can include different eligibility parameters that can apply to full-time and part-time employees, some examples include:
- Age Requirements: Although an age requirement isn’t necessary, any plan that has one can’t exclude anyone older than 21 years of age, unless they fall under the excluded employees criteria.
- Service Requirements: An employer can set a condition of minimum time employed, or minimum hours of service, as a requirement to participate in the plan. Generally to participate in a 401(k) plan this must not exceed 1 year or 1,000 hours of service. There are specific requirements that allow long-term, part-time employees to make salary deferrals into the plan, but not qualify for employer contributions.
- Entry Date: Employers can decide when employees who meet the age and service requirements officially join the plan. It could be as soon as a month after hire or delayed within other certain timelines.
- Contribution Type: Different types of contributions can have different eligibility requirements. For example, elective deferrals may have immediate eligibility, while the company match may require one year of service. Your employer will provide you with a Summary Plan Description that will give you the details of how and when you qualify for participation.
Where Can I Find My Plan Eligibility Details?
The details for plan eligibility can be found in your Vestwell portal. Navigate to the “Documents” tab, click on Plan and click on either Summary Plan Description or Plan Highlights and download the PDF file. The Plan Highlights document provides a comprehensive summary of the plan features. The Summary Plan Description is a detailed guide on the benefits the plan provides and how it works.
Excluded Employees
Depending on the plan, there are several situations where employees can be excluded from participating in the 401(k) plan, some examples of excluded employees are:
- Employees excluded based on job location
- Employees excluded based on job description or job title, such as employees who work in a certain division
- Employees who are members of a union
- Some non-resident aliens
To learn more about excluded employees, please review your Summary Plan Description or your Plan Highlights documents.
If you have any questions, please reach out to help@vestwell.com.