Eligible employees

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Eligible employees

Definition

Employees who have met the plan’s eligibility requirements for participating in the plan.

The eligibility requirements vary among plan types. The following chart provides some examples.

Feature/ Benefit	SEP IRA	SIMPLE IRA	SIMPLE 401(k)	Solo-k/ Individual-k	Traditional 401(k)	Money Purchase	Profit Sharing	Defined Benefit Plan
Age Requirement	Can exclude employees under age 21	N/A	Can exclude employees under age 21	Can exclude employees under age 21	Can exclude employees under age 21	Can exclude employees under age 21	Can exclude employees under age 21	Can exclude employees under age 21
Service & compensation requirement	Must include employees who work 3 of the 5 preceding years. A year of service is any period during the year, however short. Can exclude employees who earn less than $500	Must include employees who received at least $5,000 in compensation from the employer during any two preceding years and who are reasonably expected to receive at least $5,000 in compensation in the calendar year	Must include employees who have performed at least one year of service. A year of service can be up to 1,000 hours during the plan-year	Must include employees who have performed at least one year of service. A year of service can be up to 1,000 hours during the plan-year	Must include employees who have performed at least one year of service. A year of service can be up to 1,000 hours during the plan-year	Must include employees who have performed at least two years of service. A year of service can be up to 1,000 hours during the plan-year	Must include employees who have performed at least two years of service. A year of service can be up to 1,000 hours during the plan-year	Must include employees who have performed at least two years of service. A year of service can be up to 1,000 hours during the plan-year

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Governing plan document or agreement

Additional Helpful Information

The statutory eligibility requirements for employer sponsored plans vary among plan types. For instance:

A 401(k) plan cannot require more than one year of service for eligibility purposes
A SEP cannot require more than 3-years of service for eligibility purposes.
For qualified plans, an employer can require no more than 1,000 hours of service during a 12-month period for purposes of determining 1-year of service .
For SEP IRAs, a year-of-service is any period, however short.

Eligible employees

Definition

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Additional Helpful Information

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