Salary reduction agreement

[Guest stillhere]

Okay, no one yell at me. I have had a bad day, and I have searched high and low, and I am not lazy!

If we have an ee sign a deferral for 401k participation, and mid year the ee receieves an increase; would the ee need to sign a new 401k deferral/ reduction agreement because the % is a new dollar amount?

Thanks.

[david rigby]

Most plan documents (and administrative procedures) would not require an additional election. (Many plans base deductions on a percent.)

[Guest Pensions in Paradise]

Depends on what your plan document says. I've only seen one plan which allowed participants to change their deferral election when they had a change in their rate of pay. Except for that, most plans will have set modification periods (usually semi-annual).