Pixie Posted March 25, 2024 Posted March 25, 2024 Does anyone know if there is a time frame in which it needs to be signed? for example even though there is a one year waiting period can this form be provided when the person starts employment or does it need to be within 90 days of their enrollment.
Popular Post Paul I Posted March 25, 2024 Popular Post Posted March 25, 2024 An irrevocable election not to participate must be signed before the individual is first eligible to begin participation in the plan (or any other retirement plan sponsored by the employer which I think includes any other member in a controlled group with the employer. As a word of caution to the plan administrator, this is the type of election where in individual who misses the cut-off date may be tempted into trying to convince the plan administrator that the individual intended to sign timely, or was delayed by circumstances beyond their control, or even attempts to back date a form. The plan administrator needs to hold fast to the timing. Lou S., Belgarath, Luke Bailey and 3 others 6
Lou S. Posted March 26, 2024 Posted March 26, 2024 And particularly if this is a small employer I would encourage you to look at the problems that can arise from irrevocable opt outs, especially in the area of coverage failure that may be difficult or impossible to correct via amendment depending on your demographics which may or may not be applicable to this particular situation. Just don't want to see you tripped up by unintended consequence sometime in the future. ugueth, David Schultz, Luke Bailey and 1 other 4
BTG Posted March 27, 2024 Posted March 27, 2024 Paul and Lou are spot on. Just because someone opts out, doesn’t mean you get a free pass on them for testing purposes. These elections are almost always more trouble than they’re worth. Bill Presson and Luke Bailey 2
Ilene Ferenczy Posted March 27, 2024 Posted March 27, 2024 One more thing on this. IMO, you should NEVER permit this. The reason: this a waiver for the current plan and any other plan of the employer, regardless of whether it is in place now or not. Imagine a situation where a 25-year-old employee says, "I don't want to participate in this dumb plan." 10 years later, the employer amends the plan or starts another plan and the employee, now a 35-year-old with a spouse and 2 kids sees the value and wants to enter the plan. Don't you think he/she will then holler, "You never told me ...!!!!" Yes, they will likely lose in litigation (assuming that everything was in writing), but is this really the fight you want your clients to have.? In addition, as the others have said, if it's a small employer, it can cause you to fail coverage testing. Better to just amend the plan to exclude the person and then you can amend the plan to let them back in if they change their mind or if you need them for coverage. Just sayin' .... Ilene Bill Presson, ugueth and Luke Bailey 3
Belgarath Posted March 28, 2024 Posted March 28, 2024 Agreed. Although... I suppose that depending upon employee population, might possibly be difficult to find a valid exclusion category that would apply only to this one person?
C. B. Zeller Posted March 28, 2024 Posted March 28, 2024 Not really...just exclude them by name. Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
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