Certified Plan Sponsor Professional (CPSP) Practice Exam

Which of the following is an appropriate class exclusion from participation in a 401(k) plan?

1. Managers in the HR department

2. Employees who work on the loading dock

3. Full-time sales personnel

4. Administrative staff

The correct answer is: Employees who work on the loading dock

An appropriate class exclusion from participation in a 401(k) plan is often determined based on the nature of employment and the specifics of the plan design. In this case, excluding employees who work on the loading dock can be justified if the plan specifies criteria that align with certain job functions that may not be eligible for the 401(k) plan based on company policy or collective bargaining agreements. For instance, employers may design their plans in a way that prioritizes certain employee groups, often tied to the level of permanence or the type of work performed. Positions that are temporary, part-time, or not comparable to the core employees involved in driving business strategy might be excluded. If employees working on the loading dock fall into a classification that the employer has chosen to exclude (such as seasonal or less permanent positions), then their exclusion aligns with typical practices regarding 401(k) participation. In contrast, managers in the HR department, full-time sales personnel, and administrative staff are typically viewed as integral components of a company’s structure and operations. Excluding these roles could raise compliance issues or conflicts with non-discrimination rules that protect employees with similar classifications from being unfairly excluded from the benefits provided by a 401(k) plan.