A 403(b) plan is subject to universal availability which means that if a plan sponsor offers the plan to one employee they must offer the plan to all employees. However there are specific available exceptions allowed at the option of the employer as follows:
- Employees who are eligible under another section 403(b) plan of the Employer which permits an amount to be contributed or deferred at the election of the Employee.
- Employees who are eligible under a section 457(b) eligible governmental plan of the Employer which permits an amount to be contributed or deferred at the election of the Employee.
- Employees who are eligible to make a cash or deferred election (as defined at section 401(k)-1(a)(3) of the Internal Revenue Code) under a section 401(k) plan of the Employer.
- Employees who are nonresident aliens described in section 410(b)(3)(C) of the Internal Revenue Code.
- Employees who are students performing services described in section 3121(b)(10) of the Internal Revenue Code
- Employees who normally work fewer than 20 hours per week.
Note: An Employee normally works for fewer than 20 hours per week if, for the 12-month period beginning on the date the Employee’s employment commenced, the Employer reasonably expects the Employee to work fewer than 1,000 hours of service (as defined under section 410(a)(3)(C) of the Internal Revenue Code) in such period, and, for each Plan Year ending after the close of that 12-month period, the Employee has worked fewer than 1,000 hours of service in the preceding 12-month period. Under this provision an Employee who works 1,000 or more hours of service in the 12-month period beginning on the date the Employee’s employment commenced or in a Plan Year ending after the close of that 12-month period shall then be eligible to participate in the Plan. Once an Employee becomes eligible to have Elective Deferrals made on his or her behalf under the plan under this standard, the Employee cannot be excluded from eligibility to have Elective Deferrals made on his or her behalf in any later year under this standard.
