When to allow change in deferral amount

[jkharvey]

The document we use provides that employees must be able to revoke a salary reduction election at any time. The ER can chose how frequently they want to allow other modifications to be made. The client wants to know why he has to allow revocations at any time. I'm not finding this requirement in the Code or Regulations. Is this a statutory requirement? If so, what is the cite? Thank you

[MGB]

I am making a wild guess here. Wouldn't this be a state law issue? Under state laws, you cannot withhold funds from an employee's paycheck without their approval (except for certain items like garnishments, tax withholding, etc.). I assume that this implies they can rescind that approval at any time. Perhaps different states have different requirements and the plan document language is trying to cover all possibilities.

[Guest karhu]

I don't believe there is any law that requires participants be allowed to stop deferring at anytime. I do, however, think that not allowing it could discourage some employees from participating.