Fixed Elective Deferrals Per Pay Period

[bzorc]

Question is:

A participant has elected a fixed amount per pay period for elective deferrals, in addition to a fixed Section 125 cafeteria plan deferral. For the current pay period, because of various circumstances, there is not enough gross compensation to cover both deferrals. Can no 401(k) deferral be taken from this pay period, assuming the participant agrees and wishes to have his/her Section 125 deferral taken instead? Next pay period compensation will go back to its normal level.

Any comments would be helpful. Thanks.

[Dawn Hafner]

Does your 401(k) plan state whether 401(k) deferrals are calculated before or after other elective deferrals? Sometimes plans do this to define whether salary deferral comp is comp prior to 125 plan (normally) or comp after 125.

Even though you are not calculating a percentage for this individual, if your plan said after 401(k) deferrals are calculated after other elective deferrals then the full 125 amount should be taken and remainder 401(k).