105. Minimum age and service

Statement of Requirement: IRC 410(a)(1)(A); Treas. Reg. 1.410(a)-3(a); Rev. Proc. 2023-37, 9.03(1)

Document Provision: _____

Sample Adoption Agreement Language:

Each employee will be eligible to participate in the plan upon meeting the following eligibility requirements:

(i) Attained the age of ____ (cannot exceed 21)

(ii) Completed ____ year(s) of service (Cannot exceed 1 year, unless the plan provides a

nonforfeitable right to 100% of the participant's account balance after not more than 2 years of service in which case up to 2 years is permitted. If the year(s) of service selected is or includes a fractional year, an employee will not be required to complete any specified number of hours of service to receive credit for such fractional year.)

(Note to reviewer: If the plan provides for a single annual entry date reduce each of the limits contained in the sample provision above by ½ year (i.e. change age 21 to 20½, 1 year to ½ year and 2 years to 1½ years). This reduction can be avoided if the employee enters the plan on the entry date nearest the date the employee completes the eligibility requirement and the entry date is the first day of the plan year.)

(Note to reviewer: IRC 410(a) provides the minimum age and service requirements applicable to plans, generally requiring that no more than one year of service can be required for eligibility. However, IRC 410(a)(1)(B)(iii) allows a plan to require up to two years of service for eligibility if a participant's right to his or her accrued benefit under the plan is completely nonforfeitable after entry. Thus, any eligibility condition requiring more than one year of service (but no more than two) would require full and immediate vesting.)

(Note to reviewer: A Nonstandardized Plan may exclude additional categories of employees from participation; however, the plan must satisfy on a continuing basis the coverage tests of IRC 410(b) and the nondiscrimination tests of IRC 401(a)(4).)