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mjf06241972

Corona Virus and 401k Deferrals

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Hello, if a company is planning laying off employees due to Corona Virus, can they stop 401k contributions and would they restart when the employee resumes work?  Is there a difference between furlough and layed off for 401k deferrals start and stop? Thank you.

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Are you suggesting the plan sponsor just unilaterally choose not to honor the deferral requests?   Or is it a matter of having potential "post-severance compensation" coming up for a couple of weeks?

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On 3/22/2020 at 11:24 AM, mjf06241972 said:

Hello, if a company is planning laying off employees due to Corona Virus, can they stop 401k contributions and would they restart when the employee resumes work?  Is there a difference between furlough and layed off for 401k deferrals start and stop? Thank you.

Well, let's start with what you DIDN'T tell us: are their wages going to be continued while laid off (BTW, neither furlough nor lay off is a well defined term; both are probably the same most of the time and they show an intent that the current employment situation is temporary and the employee is expected back when the lay off ends).  I'm assuming payments are continuing (or the question makes no sense), so I would expect that the current elections need to be continued but the employee should be able to change their deductions (assuming changes are allowed with each payroll).  The employer cannot unilaterally change the employee elections.

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