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Universal Availability and 457(b) Plans

Q: My public school district is excluding employees who work 30 or less hours per week from participation in their 457(b) plan. I know that this would be a violation in the 403(b) plan, but am not sure about the 457(b) plan.

A: There is no universal availability requirement in the 457(b) plan, and it is permissible for employers to exclude certain employees from participating in the governmental 457(b) plan since there also are no other employee eligibility requirements under the federal income tax code or regulations. Incidentally, in a 457(b) tax-exempt plan (sponsored by a 501(c) employer), the employer is required to limit participation ONLY to a select group of management employees (top hat plan).

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