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Abstract
Q. Who are otherwise excludable employees? A. The term "otherwise excludable employees" refers to a group of employees who are participants in a retirement plan but could otherwise be excluded because the plan's eligibility requirements are more liberal than the requirements set forth in Internal Revenue Code (IRC) § 41 0(b) and the regulations thereunder. A plan will use special testing rules for otherwise excludable employees when it cannot otherwise satisfy the coverage requirements in IRC § 41 0 and/or the actual deferral percentage (ADP) test in IRC § 401 (k) taking into account all of the participants in the plan. [...]if a plan is using the definition of otherwise excludable employees to exclude a group of employees from sharing in the employer's safe harbor allocation or sharing in a gateway allocation, a specific definition of otherwise excludable needs to be set forth in the plan document in order to assure that contributions, benefits or allocations are definitely determinable.