1st of month 401k entry date in practice

TPApril · December 7, 2023

For plans that have 401k entry on the first of month after meeting eligibliity, which payroll do they start it with when twice monthly payroll at the end of the prior month is on, say the 5th?

that payroll which is paid after date of eligibliity or the next one which includes the date of eligibility for which payroll is run?

Paul I · December 7, 2023

This is a classic question where payroll periods and plan entry dates are not synchronized. In my experience, most plans have used the first payroll paid after the entry date, but I have worked with plans that start with the end of the payroll period that starts on or after the entry date.

What is unsaid in these discussions often deals with other payroll practices like payrolls that pay in arrears, or one or two weeks in arrears, or pay in advance.

The bottom line is for the plan administrator to decide how the rules will apply and then stick to that decision consistently.

Bill Presson · December 7, 2023

My experience of almost 40 years is that the check date is most often used. Otherwise, the administrative work is a mess.

Belgarath · December 11, 2023

I agree with Bill and Paul.

Most plans (at least that I've seen) do, however, contain some sort of clause that deferrals will begin as soon as "administratively feasible" - so there is some reasonable latitude, but consistency is important.

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1st of month 401k entry date in practice

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