Plan eligibility refers to the rules that determine when an employee is allowed to begin participating in their employer’s 401(k) plan. The eligibility rules are set by the employer within limits allowed by federal law. Eligibility usually depends on a combination of employee age, length of service, and sometimes hours worked. Once an employee meets the eligibility requirements, they must also wait until the plan’s official entry date to begin contributing. Once they have entered the plan, the employee is considered a plan participant, even if they have never made or received contributions.

Common Requirements for Plan Participation

Most 401(k) plans set requirements in three main categories:

  • Age – A plan may require employees to reach a certain age before becoming eligible. No plan may require employees to be older than 21.
  • Service – A plan may require employees to complete a certain period of service, often up to 12 months.
  • Hours Worked – If a plan uses the “hours of service” eligibility determination method, an employee may need to complete at least 1,000 hours during their first year of employment (or a later plan year).

Important: Federal rules prevent any plan from requiring more than age 21 and 1,000 hours of service in a 12-month period. However, many plans choose less restrictive options, such as:

  • Immediate eligibility – Employees can begin participating as soon as they’re hired.
  • Elapsed time method – Employees become eligible after a certain number of months of service, regardless of hours worked (not to exceed 12 months).

Eligibility vs. Entry

Meeting the eligibility requirements doesn’t always mean employees can start contributing to the plan right away.

  • Eligibility is when an employee meets the plan’s age and service requirements.
  • Entry is when the employee is allowed to begin making contributions.

Plans may have different entry schedules, including:

  • Immediate entry – Employees can start contributing as soon as they've met the eligibility requirements.
  • Monthly, quarterly, or semi-annual entry – Employees must wait until their scheduled entry date to begin contributing.

Example:
If the plan allows immediate eligibility but monthly entry, and and employee is hired on April 10th, they become eligible on that date. However, they can not begin making contributions until the next plan entry date—May 1st.

How Plan Administrators Can Check Their Plan's Eligibility Rules

To confirm your plan's eligibility requirements:

  1. Log in to your Employer Dashboard
  2. Click 401(k) > Overview in the left-hand menu.
  3. Scroll to the Eligibility section.

For detailed plan documents:

  • Go to 401(k) > Documents & Forms.
  • Open your plan’s Adoption Agreement or Summary Plan Description (SPD).

How Employees Can Check Their Plan's Eligibility Rules

To find out when you can start participating in your company’s 401(k) plan:

  1. Reach your to your Employer/Plan Administrator for a copy of the Summary Plan Description (SPD). This will tell you what the plan's eligibility requirements are.

See Understanding 401(k) Plan Eligibility Requirements for more information.

Need Help?

If you have questions, email us at info@myubiquity.com or chat with us 24/7 by clicking the chat icon after logging into your account.