Jump to content

414(h) pick-up plan amendment that does not provide for irrevocable el


Guest MA Smith
 Share

Recommended Posts

Guest MA Smith

I recently discovered a pick-up amendment that permits employees to select among a range of 2-5% but does not state that the election is irrevocable. This amendment is several years old and I am not sure how to correct this problem.

Link to comment
Share on other sites

Do you have any idea of whether people have actually been permitted to modify their elections? Although not part of formal IRS policy, it has been our experience that IRS people are often willing to give governmental plans the benefit of the doubt if the plan document is deficient, but actual practice has been in accordance with the requirements.

Also, remember that revocability of a pick-up is a tax issue, but not a qualification issue. Thus, the IRS could come back against you for past years, asserting either individual income taxes or employer withholding taxes. However, unlike a qualification issue, it does not have to be corrected retroactively in order to get favorable tax treatment for contributions made after an amendment which inserts the proper language.

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.

Link to comment
Share on other sites

Guest MA Smith

Thanks for the response! I am not sure to what extent there were actual election changes, but I will follow up on that issue. I was concerned that the mere fact that the document did not clearly prohibit the change of election that there would be constructive receipt even if no one actually made a change in their intial election.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...