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Client changed payroll timing and didn't deduct deferrals for everyone


pam@bbm

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We have a client that changed their payroll dates.   They processed a weekly payroll and then will revert to bi-weekly.   For this one weekly payroll, the client made the decision to only deduct deferrals for participants that made a percentage deferral election.  They did not deduct for those that elected flat amounts or loan payments.    I believe this falls into the category of missed deferral opportunity.   Am I correct?

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What does the deferral form state about flat deferral elections? Does it state it will come out of every check -- or what frequency?  Same for your loan documents.  What frequency does it state that loan payments will be withdrawn? I think you need to refer back to those and the plan document to look at frequency of flat amounts.

 

 

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Not really different schedules for the same plan, but I do think that different clients could have differing language -- I've seen forms that say  "each future paycheck" which would include this special payroll run and ones that say " per pay period" and in that case, one would have to define pay period if this were a special one (weekly one outside of the normal biweekly one). 

If this is truly 1/2 a pay period payroll, I think one could argue under the "per pay period" that 1/2 the flat dollar amount should have been taken. The % method would take care of itself because the wages would also be 1/2.    Don't know how to argue the loan payments without seeing the payment documentation. 

But I do think in the end there should have been some type of deferral at least if this was regular wages, not sure about loan payments.  I haven't done loans since back in the day of absolute amortization schedules where you couldn't pay anything but the payment.

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