Interpretation of Entry Date - First Payroll
Posted 03 September 2004 - 10:22 AM
What is the "official" interpretation of which payroll contributions must commence? Is it the first payment after the entry date, or the first payment for a pay period ended after the Entry Date? Consider three scenarios:
A) Payment on April 2 for the week ended March 26th.
B) Payment on April 9 for the week ended April 2nd.
C) Payment on April 16 for the week ended April 9th.
For which pay period must deferrals commence? If scenario B, would deferrals only be calculated for the service days after the entry date (i.e. April 1st & 2nd).
Any references to guidance would be appreciated.
Posted 03 September 2004 - 10:51 AM
From a practical standpoint it can be A, B, or C. It depends on the capabilities of the employer's HR systems to put the election in place.
I think the key is that if it is not A, the use of B or C just needs to be consistently applied. The last thing the employer wants is the appearence of being arbitrary. If that were the case, the door would be left open for a participant to hold the employer's feet to the fire and demand option A.
Posted 03 September 2004 - 01:13 PM
If you replace '401(k)' with 'CODA' (for the uninitiated that is a Cash or Deferred Arrangement') and remember the rules for a CODA-
Election must be made before there is constructive receipt of the funds.
Then what is constructive receipt? When the recipient can control the money. And they con't control until they receive the money!
See, the answer is simple - A - the first PAYDATE on or after the Entry date.
Posted 03 September 2004 - 02:40 PM
The "CODA" reference wouldn't seem to "force" treatment A, it just wouldn't preclude any of the options.
Is there any specific guidance on this, or is it left to the Employer to be reasonable and CONSISTENT given its administrative systems and processes? For example, Employer indicates it will start deferrals on first full payroll after the Entry Date.
I seem to remember a certain Prototype in my past that specifically addressed this, but the current documents I'm reviewing do not.
Posted 03 September 2004 - 07:43 PM
Posted 21 September 2004 - 07:24 PM