Enrollment

[mjf06241972]

What is the rule on employees enrolling in 401k?  For example, a plan has a July 1st entry date and the payroll is July 1st.  Can an employee hand in an enrollment for on July 5th for the next payroll?  Or is it a hard cut off date of July 1st if that is that they are eligible and then they have to wait until next entry date.

Thanks.

[Lou S.]

What does the Plan Document say about changing deferral elections?

[mjf06241972]

It says weekly.  This would be for a new employee that has met eligibility and they are deciding they want to get into the plan.  Not changing but entering plan.  Is there a deadline that they can go past the entry date of when they can come in the plan?

 

[Lou S.]

It seems like they are changing from 0% to something other than 0% and can do so "weekly".

[401king]

There is no deadline after the entry date for which a participant may enter the Plan. Once eligible, they may enroll at any time. The entry dates are not the dates on which a participant must enroll.

[Larry Starr]

On 3/28/2018 at 3:46 PM, mjf06241972 said:

What is the rule on employees enrolling in 401k?  For example, a plan has a July 1st entry date and the payroll is July 1st.  Can an employee hand in an enrollment for on July 5th for the next payroll?  Or is it a hard cut off date of July 1st if that is that they are eligible and then they have to wait until next entry date.

Thanks.

You are clearly confusing entry dates with deferral elections.  The entry date is the earliest date upon which they are in the plan and can make a deferral.  If this individual wanted a deferral out of  his 7/1 paycheck, he would have had to turn the deferral election form in prior to that date (but effective no earlier than 7/1).  He didn't, so whenever he turns it in, it is effective for the next payroll.  He can apparently change it any time he wants (the same way all my plans work) so he goes from a zero election to a positive election at a point after his actual entry date.  No problem.

[Kevin C]

The plan document should say when a participant can change their deferral election. It should be in a different section than the entry date provision.  The default provision in our VS document for deferral election changes is "... as set forth under the Salary Reduction Agreement or other written procedures adopted by the Plan Administrator."  The adoption agreement choices are the first day of each calendar quarter, first day of each Plan Year, first day of each calendar month, beginning of each payroll period and other.  They are required to allow changes at least once per year.  I doubt it is common , but I have seen a couple of plans that only allowed deferral rate changes to be effective twice a year (1/1 and 7/1).