Election Not to Participate - for 5 years?

[Gudgergirl]

Employee executed an "Election Not to Participate" form for a 401(k) Plan.

The form states it is effective for a minimum of 5 plan years.

I was always under the impression that if you elected not to participate in a plan it was irrevocable and lasted for the duration of your employment.

Any thoughts?

[rcline46]

If only a 401(k), then electing -0- deferrals is fine. If there are employer contributions then the waiver is invalid. Really should use a plan amendment to make person ineligible.

You are right, the waiver must be irrevocable and extends to all plans of the employer.

[BG5150]

If only a 401(k), then electing -0- deferrals is fine. If there are employer contributions then the waiver is invalid. Really should use a plan amendment to make person ineligible.

You are right, the waiver must be irrevocable and extends to all plans of the employer.

And I think it must be executed BEFORE the person becomes eligible for any portion of the plan.

Followup question: since the waiver applies to ALL plans of the employer, what happens if a person is already eligible for one of the "other" ER plans. Then the ER adopts a PS plan. Can the person sign a waiver before becoming eligible for the newest plan waive out of the "other" plan retroactively?

[rcline46]

No, that is why plan rules are used.