Employees that may be excluded from participating are:
- employees who normally work less than 20 hours a week;
- non-resident aliens with no U.S. income;
- student workers (including student teachers);
- employees who contribute to another voluntary salary reduction plan (i.e. through collective bargaining); and
- employees who will not contribute at least $200.00 annually.
Excluding any employees will greatly increase the risk of violating the universal availability requirements of Section 403(b)(A)(ii) of the Internal Revenue Code which may result in complete plan failure and loss of its tax preferred status.
Editor’s Note: This is an occasional feature in the NTSA Advisor. This tip is taken from the 403(b) Plan Sponsor Guide, which is being made available to school districts nationally to assist them in understanding how to improve 403(b) plan participation and savings rates to help employees achieve a comfortable and timely retirement.
The 403(b) Plan Sponsor Guide is part of the content contained in the NTSA Certified Retirement Education Specialist (CRES) materials. The NTSA Certified Retirement Education Specialist (CRES) program and designation has been developed in order to equip advisors to be qualified and available to teach the NTSA educational program, which is designed to provide teachers with the basics of planning for retirement and improve their retirement readiness. More information about CRES is available here.
The 403(b) Plan Sponsor Guide is part of the content contained in the NTSA Certified Retirement Education Specialist (CRES) materials. The NTSA Certified Retirement Education Specialist (CRES) program and designation has been developed in order to equip advisors to be qualified and available to teach the NTSA educational program, which is designed to provide teachers with the basics of planning for retirement and improve their retirement readiness. More information about CRES is available here.
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