Auto Enrollment / Permissible Withdrawals

[austin3515]

Auto enrollment plan where participant takes a permissible withdrawal to close their account within 90 days.

 

Match eligibility is immediate.  Do they still get the match?  Please please please tell me the answer is yes cuz I don't want to have to look for these withdrawals every time I run some numbers (let alone differentiate between permissible withdrawals and any other kind of withdrawal).

[austin3515]

1.414(w)-1

2)Forfeiture of matching contributions. In the case of any withdrawal made under paragraph (c) of this section, employer matching contributions with respect to the amount withdrawn that have been allocated to the participant's account (adjusted for allocable gains and losses) must be forfeited. A plan is permitted to provide that employer matching contributions will not be made with respect to any withdrawal made under paragraph (c) of this section if the withdrawal has been made prior to the date as of which the match would otherwise be allocated.

[Belgarath]

You have to admit that it makes sense. Receiving (or getting to keep) a match for a deferral contribution which in essence is never made is absurd.

[austin3515]

Yes, it is absurd.  What we are deliberating now internally is how hard we "look" for this when calculating a year-end match.  It seems like a giant pain in the @$$ to try and find these.  The amount of extra work coupled the amount of effort to find a possible small overpayment on match.

I know, I know, we will do the right thing.  Just annoying.

[mphs77]

If you want to avoid annoying....you are in the wrong business.

[ESOP Guy]

It isn't the annoying that is the problem in my mind it is the fact you can't charge for this annoying extra work.  I say it all the time at work.  A client can be as demanding as they want if they are willing to pay for the service.  It is the clients that want top notch service combined with rock bottom pricing.