Flat Dollar 401(k)

[Guest moltengater]

401(k) Plan allows an employee to contribute a flat dollar amount or percentage each pay period. Employee A chooses a flat dollar amount of $100 per pay period. Employee only works a few hours one week and does not have $100 in compensation for the pay period. Should the employer:

1. withhold employee's entire pay other than applicable taxes owed; or

2. not withhold anything becuase employee does not have enough pay to cover his election; or

3. withhold nothing under #2 above and make up the difference on the employee's next pay period.

The prototype doc. does not address this specific issue other than to reference the plan administrator can allow for flat dollar contributions. Also, I could not find reference to it in the ERISA outline book nor when I searched this site.

[wsp]

401(k) Plan allows an employee to contribute a flat dollar amount or percentage each pay period. Employee A chooses a flat dollar amount of $100 per pay period. Employee only works a few hours one week and does not have $100 in compensation for the pay period. Should the employer:

1. withhold employee's entire pay other than applicable taxes owed; or

2. not withhold anything becuase employee does not have enough pay to cover his election; or

3. withhold nothing under #2 above and make up the difference on the employee's next pay period.

The prototype doc. does not address this specific issue other than to reference the plan administrator can allow for flat dollar contributions. Also, I could not find reference to it in the ERISA outline book nor when I searched this site.

In the past where this has occurred with me I've always chosen route #1; the lesser of three evils type of thing.