Can a 403(b) Plan Impose a Minimum Age Requirement for Employees’ Elective Deferrals?

Q: I realize that, with limited exceptions, all employees must be given the opportunity to make elective deferrals to a 403(b) plan under the universal availability provision, but can a 403(b) plan impose a minimum age requirement—say, age 21—for an employee to make elective deferrals?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: No. A 403(b) plan must permit all employees of all ages to make elective deferrals to a 403(b) plan, with limited exceptions. Internal Revenue Code Section 403(b)(12), the section that describes universal availability, allows limited exceptions, such as for certain student employees and those who normally work fewer than 20 hours per week, but there is no mention of an exception for employees younger than age 21 or any other age. Thus, an age restriction cannot be used for elective deferrals.

Note that this provision does NOT apply to employer contributions, so age restrictions can apply to nonelective contributions.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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