Leaderboard

Not for 2016. Yes for 2017. Does not have to work 12 months.

I have a client with a 401k - participants may modify deferrals on entry dates and stop altogether at any time. They can start again on an entry date (quarterly)... they asked " if a participant does not want deferrals deducted from a certain check (ie vacation , bonus, final check) what do we need to do to accommodate them?" It is my understanding that they cannot pick and choose a paycheck, and if they stop then they must wait til next entry date to begin again. Any thoughts on this? They are on a prototype Sungard doc.

FWIW, this is my understanding as well. I doubt that a plan can allow participants to pick and choose income types from which deferrals will be made, but even if it's legal and the Plan Doc says OK, it could be an enormous administrative headache that a plan administrator would, in my opinion, be wise to avoid.

if it involves a distribution of an HCE then it just smells bad, especially if you have paid out some NHCEs earlier in the year

^to add to the above though if she rolls it to an IRA and then needs to withdrawal money before age 59.5 it would not qualify for the exemption from the 10% penalty in most cases.