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What is the Eligibility and Reasonable Classification Test?

Eligibility Benefits provided for participants who are highly compensated individuals should be provided proportionally for all other participants. For purposes of the Eligibility Test, an employee refers to all common law employees of the employer, including those who work less than a full-time schedule. If you have part-time employees that are not eligible to participate in your POP, select "NO". Reasonable Classification "Reasonable Classification" generally means that there is some reasonable rationale why an employer is including or excluding employees in the plan. For Instance, classification based on position may be permissible, but classification based on a random basis is not permissible.

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