Automatic Enrollment (Year End Match)

[PainPA]

If an automatic enrollment notification was missed by the employee and he/she subsequently had the money returned within the proper timeframe. Is that 1 pay roll for that employee required to receive a minimal match? What am I missing to not have to give a small year end match?

[ETA Consulting LLC]

When you return the money, the deferral is deemed to have not been made. If the contribution is not made pursuant to the employee's election, then it cannot be an elective deferral. Hence, the auto deferral (in orde to maintain the integrity of the election) must provide the participant an option to elect not to make it. You're only saying "if you do nothing, then you agree to defer this amount". When you don't give the employee that option, then it's not an elective deferral (and does not get a match).

Good Luck!

[PainPA]

Thanks... I think I understand but let me restate a little better.

The employee was given proper notices. However he did not take action until he saw it out of his paycheck and also when the vendor sent him something. The employee now realizes he should have paid attention to the notice that was provided.

As a result he completes the form to get his money back within the 90 day timeframe. However I am pulling this info in from the vendor and a small match is being calculated at year end.

Does this change your answer for the employee getting the small match? and I guess I need to figure out how to get it from automatically calculating the match in my pension system withour having to review each one.

[masteff]

The model IRS amendment specifically addresses match, so you need to look at your plan language. (See page 8, section 5.4 http://www.irs.gov/pub/irs-drop/n-09-65.pdf )

I'm guessing part of your question has to do with timing for when the return of the "default elective deferrals" are returned in a subsequent year, i.e., the money went into the plan in 2011 and is returned to the EE in 2012. I presume you're doing either a year-end match or a true-up.

My thought is if the funds have been returned to the EE prior to the date the match is posted then I'd zero out the match. But be sure you know what your plan document says.

[PainPA]

Thank you... I looked at the plan doc and I cannot find anything. I even went back to the online checklist to see if I missed selecting something to produce the language. I will have to review again.

Thank you for your insight on this.