Mandatory Employee Contributions - MPP - opt out?

[Trekker]

We have an old MPP effective in the early 1970's. It has always contained a provision as follows:

"Each employee who is eligible to participate and who desires to participate shall contribute 9% of his compensation for each plan year...." The Employer matches the Employee contribution.

For the first time ever, the Employer has an employee (a re-hire who formerly participated) state he does not wish to participate. The Employee was paid out when he terminated a couple of years ago.

Is it permissable for this employee to choose not to participate? Even though this is an MPP, does this bring into play the opt-out provision in the 401(k) regs?

Any thoughts are appreciated.

Note: These are after-tax mandatory employee contribuitons.

[jpod]

This sounds like an old "thrift plan" where the employer contributions were neither discretionary nor conditioned on profits, hence, a MPPP.

[Lou S.]

Unless there is an opt-out in the plan document, the word mandatory is pretty self-explanatory.

Usually there is not an opt-out as you run the risk of failing discrimination tests if too many folks opt out.

[masteff]

and who desires to participate

I'd expect the plan to mention or discuss it elsewhere if the participant actually has an option (which is why I'm sure you're questioning the word "desires"). I'd also want to read for any nuance about the rehire. You may conclude his previous choice to participate can't be waived now.

Without looking it up, I'd would not think it would be the same as the opt out in the 401(k) regs by simple virtue of a) after-tax vs pre-tax and b) your plan predates 401(k).