PSCA Releases New Eligibility Mini-Survey

Eligibility varies by contribution type

PSCA recently released a new mini-survey, 401(k) and Profit Sharing Plan Eligibility Survey 2006. This survey looks at eligibility practices in 427 profit sharing and 401(k) plans. The full report is available free to PSCA members via our Web site. 

Eligibility for Elective 401(k) Deferrals
Nearly half (48.5 percent) of 401(k) plans permit employees to begin making elective deferrals immediately upon employment. Eligibility within the first three months of employment is provided in 69.2 percent of plans, while 18.1 percent of plans require a wait of a year or longer. See Exhibits 1 and 2.

Exhibit 1: Elective 401(k) Deferral Eligibility by Company Size

Company Size (Number of Employees)
Eligibility Category	<100	100-499	500-999	1,000-9,999	>9,999	All Plans
Short Less Than 3 Months	49.1%	61.0%	61.3%	88.8%	75.8%	69.2%
Moderate More Than 3 Months, but Less Than 1 Year	18.9%	14.6%	25.8%	8.2%	3.0%	12.6%
Long 1 Year or Longer	32.1%	24.4%	12.9%	3.0%	21.2%	18.1%
Total	100.0%	100.0%	100.0%	100.1%	100.0%	99.9%

Eligibility for Company Matching Contributions
Immediate eligibility for company matches is present in 34.1 percent of plans. Eligibility within the first three months of employment is provided in 48.8 percent of plans, while a wait of a year or longer is required in 36.9 percent of plans. See Exhibits 3 and 4.

Exhibit 3: Matching Contribution Eligibility by Company Size

Company Size (Number of Employees)
Eligibility Category	<100	100-499	500-999	1,000-9,999	>9,999	All Plans
Short Less Than 3 Months	27.1%	45.7%	42.9%	67.2%	47.5%	48.8%
Moderate More Than 3 Months, but Less Than 1 Year	21.2%	12.9%	28.6%	10.4%	8.2%	14.4%
Long 1 Year or Longer	51.8%	41.4%	28.6%	22.4%	44.3%	36.9%
Total	100.0%	100.1%	100.0%	100.0%	100.0%	100.1%

Eligibility for Non-Matching Company Contributions
Slightly more than half (52.5 percent) of plans require participants to wait a year or longer for profit sharing. Immediate eligibility is present in 16.7 percent of plans, and 25.3 percent of plans provide it within the first three months. See Exhibit 5.

Exhibit 5: Non-matching Company Contribution Eligibility by Company Size

Company Size (Number of Employees)
Eligibility Category	<100	100-499	500-999	1,000-9,999	>9,999	All Plans
Short Less Than 3 Months	18.1%	24.6%	13.0%	36.4%	28.6%	25.3%
Moderate More Than 3 Months, but Less Than 1 Year	20.5%	24.6%	30.4%	20.8%	19.0%	22.2%
Long 1 Year or Longer	61.4%	50.9%	56.5%	42.9%	52.4%	52.5%
Total	100.0%	100.1%	99.9%	100.1%	100.0%	100.0%

Minimum Age Requirements
Minimum age requirements do not vary much by contribution type. 62.9 percent of plans specify a minimum age requirement for participant deferrals. The most common ages specified are age 21 (40.6 percent of plans), and age 18 (19.6 percent of plans). See Exhibit 6.