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414(h) employer amendment


Guest Vicki Swartwood
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Guest Vicki Swartwood

May an employer amend his 401(a) plan 414(h)(2) designated employee contribution from a designated $ amount to a percent of compensation?

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There is no problem under federal law with the employer doing this. However, it may raise problems under state law. For example, courts have held that Constitutional provisions preclude modification of any employee's future pension accrual rights in a way that is unfavorable to that employee. Thus, if any employee's contribution went up (without a corresponding increase in the benefit), you could have a problem.

You would also need to look at applicable state and local law to determine whether they imposed any restrictions on employee contributions, and/or on pick-ups.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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