Limits On Amount To Be Deferred

[ERISA-Bubs]

Our plan says that participants can defer up to $50,000 and more in the employer allows it. In the past we have allowed Employee to defer more. This year he elected to defer more than $50,000. We now have decided we do not want him to defer more. Can we impose the $50,000 on him even though the year has already started and he elected to defer more?

[XTitan]

Not knowing the full details, I vote for probably not. The election had to irrevocable by the last day of the prior year, and lowering the limit in the current year could be construed as a partial revocation (i.e. an acceleration). Wonder if you could reduce the bonus by a similar amount?

[ERISA-Bubs]

XTitan - I believe you are right. There is some language in the preamble to the final regs that says, if a participant is given an election to deferr, the employer may not override that election after the due date for the participant's election. Thanks for your help.