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Guest elmo27

409A Deferral Election Issues

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Guest elmo27

If an employee separates from service and is subsequently rehired in the same year, can the employee or employer make election changes or is the employee locked into the previous election he/she made earlier in the year? Basically, does a separation from service cancel out an employee's previous elections? Any guidance on this issue is appreciated.

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If an employee separates from service and is subsequently rehired in the same year, can the employee or employer make election changes or is the employee locked into the previous election he/she made earlier in the year? Basically, does a separation from service cancel out an employee's previous elections? Any guidance on this issue is appreciated.

There is nothing in 409A that states that deferral elections are cancelled on separation from service, and the initial deferral eligibility rules don't apply if the employee participated in the 24 months prior to rehire.

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Guest elmo27
If an employee separates from service and is subsequently rehired in the same year, can the employee or employer make election changes or is the employee locked into the previous election he/she made earlier in the year? Basically, does a separation from service cancel out an employee's previous elections? Any guidance on this issue is appreciated.

There is nothing in 409A that states that deferral elections are cancelled on separation from service, and the initial deferral eligibility rules don't apply if the employee participated in the 24 months prior to rehire.

Thank you, I appreciate your input. My research indicates the same, but confirmation from someone else is always value added.

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