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Pick-up Contribution Election Effective Date


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A governmental 401(a) plan allows employees to make an irrevocable pick-up contribution election within a range of 1% - 10% of compensation. The plan also allows employees to make a one-time irrevocable election to not participate in plan. The plan has an age 21 and 1 year of service requirement with monthly entry. If an employee is eligible to enter the plan on 4/1/2016 must s/he make the election by 4/1/2016 or they don't make an election can they make it at a later date (e.g., 1/1/2019)?

The 401(k) regulations provide:

§1.401(k)-1(a)(3)(v) Certain one-time elections not treated as cash or deferred elections. A cash or deferred election does not include a one-time irrevocable election made no later than the employee's first becoming eligible under the plan or any other plan or arrangement of the employer that is described in section 219(g)(5)(A)….

It appears the employee would need to make the election by 4/1/2016.

Also, to the extent the plan allows for a range, should the plan contain a provision as to what happens if the employee does not make an election or can that be disclosed in an employee communication or an election form.


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As set forth in the 401(k) regulations, the employee needs to make the election by 4/1/2016.

To the extent the plan provides a range, you could do one of two things. You could require an employee, as a condition of employment, to select an option. Or you could have the plan provide for a default option. The default option should be set forth in the plan, rather than just being part of an election form.

Employee benefits legal resource site

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Thank you Carol. There is so little guidance on pick-up contributions. This could be a great topic for ASPPA’s annual meeting.

Have you ever seen a plan that has a provision indicating that plan entry dates are daily for 60 days then becomes monthly? The employer has a one year of service requirement and gives employees 60 days after meeting eligibility requirements to make their one-time only pick-up contribution? Once they make their election the employee enters the plan and the pick-up contribution becomes effective. If an employee doesn't make an election within the 60 days, they will enter the 1st of the next month and the default pick-up percentage that becomes effective as of that date.

Seems odd to me. To me the document should say when entry is as of a specified date (e.g., 1st of the month) and give employees 60 days before their entry date to make the election. If no election is made the default applies on their entry date.

As always we appreciate your expertise and support. Thank you.

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