Universal Availability

The employer may exclude certain employees from the Plan:

• Employees who will contribute $200 or less annually
• Employees who participate in a 401(k) or 457(b) plan or in another 403(b) Plan of the employer
• Nonresident aliens
• Employees who normally work less than 20 hours per week
• Students performing services described in IRC Section 3121(b) (10)

If any employee who fits one of these exclusions has the right to make contributions, then all employees who fit that exclusions must be given the opportunity to make contributions.

For an employee who normally works less than 20 hours per week, the employer reasonably expects the employee to work fewer than 1,000 hours for each plan year ending after the close of the initial year. Once an employee works more than 1,000 hours in a plan year, the employee must be permitted to make contributions in the Plan from that time forward. 

If you do exclude eligible employees, even by mistake, an operational Plan error occurs which could result in adverse tax consequences and tax penalties. If you have immediate questions or concerns, please contact us.

Plan Eligibility Notice Requirements

To comply with the 403(b) Plan Universal Availability requirement, you must notify all eligible staff members at least once a year about eligibility to participate in the 403(b) Plan. As part of our administration services, AFPlanServ provides you with an annual sample eligibility notice to help meet this requirement. 

You may distribute the sample or use it as a template for your customized notification. If you're unsure who is eligible for participation, please refer to your Plan Adoption Agreement or contact us.