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Entry date for salary reduction only 403(b)?


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Is the employees DOH the only allowable entry date? Can it be the first day of the month following the DOH? If the plan excludes employees who normally work less than 20 hours a week, when would employees who work less than 20 hours a week then start working more than 20 hours a week enter the plan?

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You have written plan? The document probably spells out the requirement.

Drawing up a new plan? Take a look at the new LRMs which will be applicable to the first set of pre-approved 403(b) plans, see page 19, number 29, at http://www.irs.gov/pub/irs-tege/403b_lrm0315_redlined.pdf

Although this language is not likely in plans now, here's what the LRM says:

The blank should be filled in with the plan section number corresponding to LRM 17. A plan may allow for reasonable administrative procedures for plan entry for making elective deferrals, including a reasonable period for providing a participant notice of the right to defer and a reasonable election period, provided that §1.403(b)-5(b)(2) of the Treasury Regulations is satisfied. A plan that provides notice of the right to defer no later than 30 days after commencement of employment, allows the participant to make an election up to 30 days after notice is provided, and provides that the participant’s election will be effective as soon as administratively practicable will be treated as having reasonable administrative procedures that do not cause the plan to fail to satisfy §1.403(b)-5(b)(2).

So, it looks like there is some hope for at least up to two 30-day periods once those documents get approved by the IRS.

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