Jump to content

Mandatory 414(h) "Pick-up" Provisions and Irrevocable Waiver


Guest mmagidson
 Share

Recommended Posts

Guest mmagidson

When a sponsor establishes a plan with a mandatory 414(h) provision, I know that an employee can make a one-time irrevocable waiver not to participate and the regs regarding 401(k) plans state that such a one-time election will not be treated a a cash or deferred election. Treas. Reg. 1.401(k)-1(a)(3)(iv). However, in this reg, it states that, amoung other requirements, the waiver must apply to "contributions....... made by the employer on the employee's behalf to the plan and to any other plan of the employer (including plans not yet established) for the duration of the employee's employment with the employer....."

What if the employer adopted a plan in the future requiring no employee contributions? What if the employer amended the original plan to abolish the 414(h) provision?

Am I reading too much into the reg. or is the employee just out of luck for good with that employer?

Does the reg. only apply to future plans with employee contributions?

Thanks to all for the feedback.

Link to comment
Share on other sites

  • 2 months later...

In theory, under the regulations, the election would have to be both irrevocable and made at the first time the employee was eligible to participate in any plan of the employer. However, in recent private letter rulings under I.R.C. § 414(h)(2), the IRS has taken a much more liberal position. (Some of the ones dealing with purchased service credit seem to allow for annual "one-time irrevocable elections.") You might want to check these out.

------------------

Employee benefits legal resource site

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...