hardship restarting deferrals

[JKW]

Hello. A participant took a hardship in 2014 and the deferrals were suspended. Who's responsibility is it to restart deferrals after the hardship? Its not stated in any procedures the plan sponsor keeps. In this case, the plan did not restart after 6 months.

[Jim Chad]

What does your doc say? Does your form say anything? The form we use tells them that a signature on this form revokes any previous deferral elections.

[JKW]

Hi. The document does not discuss restarting . The form states "I agree to suspend my payroll deductions as set forth in condition #3. Condition 3 states " I must suspend my contributions to the Plan for 6 months after receipt of my hardship distribution". Thoughts?

[Jim Chad]

Ouch!

[rcline46]

I would interpret 'suspend' in the normal way, that deferrals would restart automatically at the end of 6 months. as Jim Chad said - "ouch"

[Mike Preston]

I think I disagree. It is just as reasonable to interpret it as meaning "suspend for at least 6 months" and that silence as to whether restarting is automatic means that the participant must restart.

[JKW]

I agree with you Mike - I think b/c it says 'at least'- it can't be assumed to restart.

[Griswold]

I would take Mike's approach.

[GMK]

I agree with you Mike - I think b/c it says 'at least'- it can't be assumed to restart.

not that I disagree with Mike's interpretation, but where does it say "at least" in post #3, above?

Is it unreasonable to interpret Condition 3 as saying for 'exactly' 6 months? - although this would still leave open the question of who is responsible to restart the deferrals.

[jpod]

Neither interpretation is ridiculous, but I have to say that I think the better interpretation is that it is 6 months and only 6 months and the deferrals should have started automatically thereafter (assuming the Plan document doesn't help on the opposite interpretation). Look at it this way, you are giving the participant a pre-printed form, or a computer screen, that gives him only a statement to acknowledge, and it says "6 months," not "at least 6 months." I think the participant's fairest assumption in that case is that it will re-start in 6 months unless he elects something different. I wouldn't let this wound fester any longer and I would do the following. I would ask the participant whether it was his intent to restart or not. Worst case scenario is that he says "yes," so you restart and correct for the past via SCP. Maybe you'll get lucky and he'll say "no," and you'll get that in writing, in which case you won't restart and you can perhaps decide to take your chances and decide not to self-correct, although I don't think that's particularly advisable.