Verrill Dana, LLP

We are often asked about the permissibility of excluding certain categories of employees from participating in an employer’s tax-qualified retirement plan.[1] This post provides a high-level summary of what is and is not permitted.

  • Excludable by Statute. Certain categories of employees, by statute, may be excluded from participating in an employer’s tax-qualified retirement plan.

Under Section 404 of ERISA, plan fiduciaries must act for the exclusive benefit of plan participants and beneficiaries and use plan assets only to provide benefits and defray reasonable expenses of administering the plan. In addition, Section 406 of ERISA prohibits a plan fiduciary from engaging in self-dealing. The Department of Labor (“DOL”) has taken