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Per Diem Employees

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Hi, I have some employees who elected to participate in my plan this year who are per diem. Their longevity and income over 2 prior years made them eligible.  However I am seeing recently that some employee's may not work for a couple of weeks at at time. My payroll company is accruing their contributions and are planning on withholding on the next paycheck.  Since its an employer sponsored plan, they are not giving me any guidance - they are saying they will do what every I advise. 

Are there any rules around this?

Given the workforce I employ, withholding 4-5 weeks of accrued contributions, even though it will go into their plan, will still be large hit to the employees in question and I suspect they will not be happy about. Trying to get ahead of this. 

appreciate any insight. thanks Vincent

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Taking an educated guess that this is a SIMPLE?  Payroll companies are the bane of our existence...WTF does it mean to accrue contributions from a $0 paycheck?!  IMO this is "simple" - if someone has a paycheck and has elected a $ or %, you withhold that $ or % from that paycheck, period.  No paycheck, no withholding, no "accrual."  Anything else is stupid.

Ed Snyder

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Just a guess, did employees elect a fix dollar amount per pay period? Like $50 per pay period on the election form but some payroll they have no compensation and payroll is saying they "owe" that amount for the payroll they had no compensation?

I agree with Bird. If that's their position it's a stupid one.

It might make some sense in the case of health care premiums but I can't see where it would make sense for retirement plan contributions.


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