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414(h)(2) pick-up contributions - condition of employment


Guest Madalyn Clark
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Guest Madalyn Clark

Can a plan require, as a condition of employment, that an employee participate in a 414(h)(2) pick-up plan?

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Well, typically it would have to be the employer which would require plan participation as a condition of employment. However, in the case of a statewide plan embodied in a statute, the difference may not be meaningful, because the state statute would govern the employer (the state and/or local governments) as well as the plan itself.

From an IRS perspective, there is no problem at all with making plan participation a condition of employment. However, you need to check applicable state and local law carefully. States may, for example, have laws stating that no amounts may reduce an employee's paycheck unless the employee voluntarily consents to them. Under such circumstances, it may be better to have plan participation something as to which employee's make an irrevocable choice at the time of first employment, rather than making it something which is required as a condition of employment. Either approach works from an IRS perspective.

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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.

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