401k Contributions missed a payroll

[JKW]

I was just wondering what common practice was when a participant hands their enrollment form in a week or so after the plan entry and misses the first payroll run. For example a plan has a 7/1 enrollment first payroll is 7/7. The participant didn't hand in the enrollment form until 7/10 so the contribution deferral was not established until the 2nd payroll run. Does the participant just start from the 2nd payroll run, are the employees told "too bad wait until the next enrollment", or double up on the deferral for the 2nd payroll?

Wondering how other admins handle this. Thanks.

[QDROphile]

One way to look at the circumstances is that the employee participates at the first entry date with an election of zero unless another election is submitted (just like automatic enrollment would set the election at another level) and a new election can be submitted effective as soon a election changes can be made effective under the administrative rules of the plan. I cannot tell if that would be the "2nd payroll run" in your question. If election changes can be made effective each payroll period, then yes.

[JKW]

The plan only has semi annual changes.

[K2retire]

The plan only has semi annual changes.

Remember that deferral changes and plan entry are not necessarily the same thing. This is something many plan sponsors don't understand.

[shERPA]

What K2retire said. The employee is a participant on their entry date based on the plan provisions and eligibility, regardless of their electing to defer. So turning in an election form now is merely submitting a change in the election, not enrolling in the plan.

Does the plan document actually have hard-coded language that says participant may change their election only twice a year? This is unusual (though not unheard of) in my experience.

[JKW]

Yes - deferral changes only semi-annual. Can stop any time but changes only semi-annual.

[Lou S.]

If you want to follow the terms of the document, deferral would change from 0 to election on 1/1.

Is there a reason the forms were turned in late? I mean did the participant get an enrollment package at the end of June? Or did they get one in May an just sit on it?

[JKW]

They just didn't send it in on time.