What defines an "eligible employee" in a 401(k) plan?

An "eligible employee" in a 401(k) plan is defined as an employee who meets specified criteria set forth by the plan and regulatory guidelines. This generally includes factors such as age, length of service, and employment status. For example, a plan might specify that employees must be at least a certain age (often 21) and have completed a certain period of service (such as one year) before they can participate in the 401(k) plan.

The other options do not accurately reflect the broad and variable criteria used to determine eligibility for a 401(k) plan. Length of service being strictly set at 10 years is not a standard practice, as most plans have shorter service requirements. Enrolling in a health plan is unrelated to 401(k) eligibility, as participation in one does not imply entitlement to participate in another. Similarly, while salary thresholds can play a role in certain aspects of plan contributions or distribution limits, they are not foundational to determining eligibility for participation in the plan itself. Thus, the first choice accurately encapsulates the concept of eligible employees as defined by the qualifying criteria of the plan.