Although an employer may not impose a 1,000 / last day requirement in order to allocate the 3% safe harbor nonelective, can an employer exclude a participant who would otherwise be eligible, but termed with fewer than 500 hours (statutory exclusion)?

Page 11.401 of the 2001 ERISA Outline Book
Appendix A: Table of 401(k) Safe Harbor Requirements

"Must provide safe harbor contribution to all NHCEs who are eligible for the 401(k) arrangement (IRS Notice 98-52)"

"May not require minimum hours (e.g. 1,000) or last day employment to accrue the safe harbor contribution"


Hope this helps!

If the person was eligible during the year and not excludible due to the 21/ 1year rules (statutory exclusions) then they MUST receive the 3% non-elective.

A person who terminates with <500 hours is not a statutory exclusion.

LWilson (and others):
for clarification:
Term < 500 hours does not fall under the 'otherwise excludabled' group. The 'otherwise excludables' are those people who would not have entered the plan IF the plan had imposed a 1 year/age 21 requirement.
and remember, just because an ee terms and has less than 500 hours, he still might be eligible for a contribution. in the case of a safe harbor, he has to be. and since he receives a contribution, he is not excludable from the testing.