I have a client who owns a staffing firm. They hire Temporary employees (not 1099). Most of them work less than a year, but some of them will work for more than a year. I’m having trouble with the eligibility rules…. the 5305 form states this:

b Limited Eligibility. Eligibility is limited to employees who are described in both (i) and (ii) below:

(i) Current compensation. Employees who are reasonably expected to receive at least 5,000 in compensation (not to
exceed $5,000) for calendar year.
(ii) Prior compensation. Employees who have received at least in compensation $5,000 during any
calendar year(s) 1 preceding the calendar year.

So, essentially – limited eligibility, 5,000, $5,000, 1 year.

First question: Can a temporary employee contribute to the Simple?
Second question: Under this plan and eligibility, it looks as if the temporary employee would be need to be employed with the company for 1 year and earned at least 5K, and would be expected to earn at least 5K in the year they become eligible. I am interpreting this correct?