Jump to content

increasing deferral elections during year


Guest Bobclp

Recommended Posts

Guest Bobclp

what are the risks associated with giving participants option to increase their deferral percentage or dollar amount during the middle of the plan year? can current election be revoked and replaced by a new election? if so, how frequently - quarterly, monthly?

Link to comment
Share on other sites

  • 3 weeks later...
Guest wmacdonald

As you know,all elections must be made before the period of service during which the compensation affected by the election is to be earned. The IRS takes the informal position that the election should be made on a yearly basis, although prevailing case law appears to permit changes at any time, as long as they apply only to compensation not yet payable. As well, the IRS takes the informal position that a plan may permit a participant to revoke his or her election to defer, but the revocation must be done with respect to amounts yet to be earned and the plan must provide that the participant may not elect to defer again until the next calendar year. The latter position is not supported by existing case law. Most of our plans have annual election, although we do have one plan that allows changes quarterly, following the compensation issues mentioned above.

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
×
×
  • Create New...