Yes. A qualified retirement plan can impose conditions other than age and service for participation, provided that the minimum coverage requirement and, if applicable, the minimum participation requirement are satisfied. For example, a plan could require that an employee not be an hourly paid employee or not be employed within a specified job description (e.g., sales representative) to be eligible to participate.

Union employees. The most common exclusion, other than exclusions based upon age and service, applies to union employees on whose behalf negotiations for retirement benefits have been conducted with the company. The company may exclude union employees from coverage, whether or not they are covered under a separate retirement plan, as long as retirement benefits were the subject of good-faith bargaining.

Where a child of the business owner works for the business in both union and nonunion capacities, receives separate union and nonunion compensation, and receives all union benefits, including participation in the union pension plan with respect to the child's union compensation, IRS representatives have opined that the child can also participate in the employer's qualified retirement plan with respect to the nonunion compensation.

Plan provisions may be treated as imposing age and service requirements, even though the provisions do not specifically refer to age or service. Plan provisions that have the effect of requiring an age or service requirement with the employer will be treated as if they impose an age or service requirement.

Source: Employee Benefits Management Directions, Issue No. 507, February 7, 2012.