Interns can get a 401k, but it's not a guarantee. Many companies offer a 401k plan to their interns, but it depends on the company's policies and the intern's status.
Some companies consider interns to be employees and offer them a 401k plan, while others may not. It's essential to review the company's benefits package to understand their 401k policies.
If a company does offer a 401k plan to interns, the contribution limits are typically the same as for regular employees. In 2022, the annual contribution limit for 401k plans is $19,500, and if you're 50 or older, you can contribute an additional $6,500 as a catch-up contribution.
The company may also match a portion of the intern's 401k contributions, which can add up to free money in the intern's retirement account.
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Intern 401(k) Eligibility
Interns can be excluded from participating in a 401(k) plan, but different conditions must be satisfied depending on the nature of the intern job classification.
Employers can exclude certain job titles from participating in their 401(k) plan, such as interns, if the exclusion is not service-based. However, if the exclusion is tied to service, like seasonal or temporary employees, it may not be permissible unless specific "fail-safe" language is included.
The IRS considers an exclusion of interns to be a service-based exclusion if the employer defines "interns" as employees who are expected to work a certain number of months or no more than a certain number of hours per week. Even if the employer doesn't define the "intern" position in terms of service, the IRS may still consider the categorical exclusion of interns to be a disguised service-based exclusion.
Employers should discuss with their legal counsel whether their definition of "interns" could be considered a service-based exclusion.
Here are some key points to consider:
- Fail-safe language is required if the exclusion is tied to service.
- The fail-safe language prevents a plan from impermissibly excluding an employee who has completed a year of service.
- The language provides that any employee in the excluded class who completes at least 1,000 hours of service in an eligibility computation period will be eligible to participate, and any employee in the excluded class who completes 500 hours during each of three consecutive 12-month periods will be eligible to make deferral contributions.
Some employers, like Sandia, may choose to include interns in their 401(k) plan, allowing them to contribute between 2% to 75% of their eligible compensation.
Interns and part-time employees are allowed to participate in a 401(k) program if they meet plan eligibility requirements, including being at least 21 years old and meeting a service requirement, such as working at least 500 hours in three consecutive years.
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401(k) Plan Worthiness
If you're an intern age 21 or older, you're eligible to contribute to Sandia's 401(k) plan.
You can contribute between 2% to 75% of your eligible compensation on a pretax, Roth and/or after-tax basis, up to the applicable IRS limits.
Contribution limits can be tricky, so keep in mind that if you've worked for multiple employers, you're responsible for monitoring the IRS annual limit for all plans in which you've made contributions.
If you worked for affiliated companies like Honeywell, the IRS limits apply to contributions made under all affiliated company plans combined.
To enroll or make changes to your plan, visit 401k.com or call Fidelity at 800-240-4015 - it may take one to two pay cycles for your elections to be reflected in your paycheck.
If you don't make an investment election, your contributions will automatically be invested into the target date fund with the target date closest to when you will turn age 65.
Here are the key contribution options:
- Pretax contributions: up to 75% of eligible compensation
- Roth contributions: up to 75% of eligible compensation
- After-tax contributions: up to 75% of eligible compensation
401(k) Plan Administration
If you're a student intern at Sandia, you're in luck because you can contribute to their 401(k) plan. Beginning January 1, 2023, all student interns age 21 and older are eligible to make contributions to Sandia's 401(k) plan.
You can contribute between 2% to 75% of your eligible compensation to your 401(k) Plan account on a pretax, Roth and/or after-tax basis, up to the applicable IRS limits. You are immediately vested in your employee contributions.
If you've worked for multiple employers during the year, you're responsible for monitoring the IRS annual limit for all plans in which you've made contributions. This means you need to keep track of your contributions across all affiliated company plans.
To elect or change contributions, visit 401k.com or call Fidelity at 800-240-4015. It may take one to two pay cycles before your elections are reflected in your paycheck.
Here are the key contribution options:
- Pretax contributions: You can contribute up to the IRS limits on a pretax basis.
- Roth contributions: You can contribute up to the IRS limits on an after-tax basis.
- After-tax contributions: You can contribute up to the IRS limits on an after-tax basis.
If you don't make an investment election, your contributions will automatically be invested into the target date fund with the target date closest to when you will turn age 65.
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Frequently Asked Questions
Who cannot participate in a 401k?
To participate in a 401k, you must be at least 21 years old and have completed a year of service, unless you're covered by a collective bargaining agreement that doesn't allow it. If you don't meet these requirements, you may not be eligible to join a 401k plan.
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