Guest SG Posted February 24, 1999 Posted February 24, 1999 If a plan has a pre-determined layoff, for only a specified period of time, would it be acceptable for the participants to make one lump sum (pre-tax basis)contribution after returning to work at the end of the layoff? Or, must they continue to make the scheduled contributions on an after tax basis? Thanks
Joe Priselac Posted February 24, 1999 Posted February 24, 1999 SG It sounds like you have a seasonal type of business such as a landscaping company or a school district. The plan can be operated so that the entire annual election is withheld before the scheduled layoff occurs.Then you don't have to worry about catching up contributions. To specifically answer your question, yes you can allow employees to catch up because the proposed Section 125 regulations allow employees to change their salary reduction elections when they take unpaid leave i.e. change in work status.
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