I have a new startup plan. The plan sponsor is a wholly owned subsidary of a Japanese parent company (no other U.S. owned businesses). The U.S. company has employees that transfer over from Japan on work visas and stay a maximum of five years. The U.S. company wants to exclude these employees from the plan and I can not seem to find an acceptable excludable classification based on the following facts. Does anyone have an idea of how to exclude?

Facts:

-the employees have U.S. source income
- they live and reside in U.S. for max of 5 years
-They each have different job titles
-they are not here for a specific project (was thinking of special assignment employee exlusion)
- They are not hourly

Any suggestions would be appreciated....

Does the company have enough employees that the plan could pass coverage if the targeted employees were excluded by plan language?

If they are HCEs they can be excluded as an ineligible class.

mbozek - unfortunately, they are not HCE. But that's a great idea for future reference.

wdik - there are no HCEs in the plan, so coverage would not be an issue. Do you have any "plan language" in mind?

I am not a lawyer, but is there anything wrong with plan language that excludes all employees with work visas.

Two thoughts: (1) exclude all Japanese nationals; (2) exclude employees covered by a non-US plan (assuming they are covered by the parent company's plans. Either of these should work as a non-discriminatory class.

can these suggested classifications be supported in a prototype? I am not sure what the "Other" selection under excludable employee in the prototype is capable of supporting.

If there are no hces in the plan then you can exclude the visa workers by category because discrimination is only prohibited in favor of HCEs. Other is any category not listed in prior groups.

Great Information!!!! Thanks everyone.