What requirement must a Qualified Plan meet concerning employee participation?

A Qualified Plan must meet the requirement of having a set participatory threshold without discrimination. This means that the plan must establish criteria for participation that are applied consistently to all eligible employees, ensuring that no one is unfairly excluded based on factors such as race, gender, or other discriminatory criteria.

The goal of this requirement is to promote fairness and inclusivity in retirement planning, allowing all employees who meet the established criteria to participate in the plan. This approach aligns with the nondiscrimination rules set forth in the Internal Revenue Code, which are designed to ensure that qualified plans benefit a broad segment of employees rather than just a select few.

Having a participatory threshold helps avoid situations where plans might inadvertently favor higher-paid employees. It ensures that all employees, regardless of their specific job or salary level, have a reasonable opportunity to participate, thereby enhancing overall employee morale and retention.

The other options, while potentially relevant in different contexts, do not accurately represent the core requirement of Qualified Plans regarding employee participation. For instance, 100% participation from all employees is unrealistically strict. Permanent employee status and full-time employment only set unnecessary limitations that could exclude part-time or temporary staff, which contradicts the principle of inclusivity central to these plans.