401k Enrollment

[Guest jefe96]

I just wanted to get some opinions about something. Plan has immediate eligibility with 1st of the month following hire date entry date. Person was hired 10/29/04 so entry date is 11/01/04. Enrollment forms were completed on or a day or two after hire date and returned to HR. First deduction did not occur for employee until first December payroll due to administrative reasons. These reasons are having to notify payroll to start deductions on next payroll run and getting enroll info to record keeper. Question: Is there are any requirement to go back and do retroactive withholding for this employee since he missed out on 2 payrolls in November before his deductions started? There was no administrative oversight and the HR people followed policy and procedure for enrolling this person. Meaning that all employees are treated the same and enrolled over the same time frame.

[WDIK]

Do the enrollment matierals specify when the election will be effective?

My opinion is that the deferrals should be withheld beginning with whatever payroll is designated by the election. If it is administratively impossible to begin withholding deferrals on such short notice as might apply to this scenario, I would recommend a change in plan language or administrative policy to allow sufficient lag time.

[Guest jefe96]

The salary reduction agreement states what payroll period the election is being made for. But in this case that information was completed by the employee or staff.

[WDIK]

But in this case that information was completed by the employee or staff.

I'm not sure I understand what you mean by this. Would you please be kind enough to elaborate?

[Guest jefe96]

Sorry. The salary reduction agreement is signed by the employee and the payroll period for which they would like deductions to begin would be filled in. However in this case neither the employee nor the HR staff completed anything pertaining to which payroll period the deductions should begin. So, the employee did not specify for which payroll period to begin deductions and the HR staff followed procedure in terms of notifying payroll and the record keeper.

[WDIK]

The lack of specific instructions certainly creates an ambiguous situation. At this point, I would probably be inclined to let sleeping dogs lie (assuming the canine is indeed in a state of slumber), but I would also want to improve a system that requires a month to set up a deferral arrangement.