403(b) Plan irrevocable election

As a resident physician of a NYS hospital, making only 75k per and loaded with 500k of debt, my son-in-law made a one-time only, irrevocable election on the 403(b) plan of just 5% during the first day of orientation, without realizing what the future consequences could be. Now 5 years later, after finishing a one year fellowship in Vanderbuilt Univ Hospital in TN, the same NYS Hospital has offered him a lucrative contract as a board certified physician. However, he didn’t even recall signing the original irrevocable 403(b) form on his first day 5 years before, nor did anyone explain what the loss consequence could be if he later took a full position after residency. (He was obviously very poor, struggling and loaded with debt at the time he signed.) Is there any way, or is there any precedent in altering this one-time only election. 

Depends on the terms of the NYS hospital's plan. If his goal is to contribute less, then it might be that he has to be treated as a new employee again under plan rules. However, just a termination and rehiring would not be sufficient as that could easily be abused to negate/change an "irrevocable" election.

If he wants to do more I would expect that is very possible - usually these initial irrevocable elections are the mandatory piece required by the employer to be in the plan and then there is usually a voluntary piece that the employee can vary at their discretion. The advantage of that irrevocable mandatory 5% is that, if properly crafted/administered, it does not count toward the individual's annual 402(g) deferral limit. That is, it gets treated more like an employer contribution. 

There really isn't a way to alter the one-time irrevocable election.  An election that is revocable is subject to a dollar limit.  Employers sometimes allow for irrevocable elections in order to allow employees to choose much higher contribution levels.  However, the down side of this is that the IRS has strict guidelines for when an election will be considered irrevocable.  If the employer were to make an exception for your son-in-law, it could potentially mean that every other employee who had made an irrevocable election would lose the tax benefits of doing so.  Given that, the employer is unlikely to make such an exception. 

Your son-in-law's choices are likely to be either to deal with the reduction in take-home pay from this hospital, or to find a job with a different hospital. Given that you describe the position as "lucrative," can he really not afford to put aside 5% toward his retirement?

Thank you for your reply.
His intention is to maximize both the voluntary 403(b), and increase his irrevocable 403(b) percentage, so he could also maximize the total irrevocable allowable limit. Thus maximizing both allowable limits each year. Is the irrevocable one-time signing any part of a binding Federal, or State law? Or is this irrevocable % election the institutions rule. Being treated as a new employee again would be preferable if it is legal to do so. 
Also, what events would cause the one-time irrevocable election to be irrevocably binding. For instance if the tax preparer never properly report the 403(b) deferred income, could that mean the election % could still be altered. Or am I misunderstanding the concept. 

Hi Carol, I just saw your reply after I sent my previous post. So please just disregard anything redundant. But maybe there’s part you can further reply to 

Unfortunately, there simply is not a way to modify that irrevocable election. The irrevocable one-time requirement comes from section 402(g) and related regulations, which limit the amount of a revocable election. In order to avoid the 402(g) limit, the  election must be truly irrevocable. If an employee were permitted to change their mind and increase the “mandatory” contribution, the contributions of all employees would then be considered to be elective deferrals subject to the 402(g) limit.  

Mark Va, it seems to me that both CuseFan and Carol V. Calhoun are right in the abstract. The actual answer for your son will probably hinge on the plan provisions and the wording of the election. They are irrevocable, but usually only apply to the mandatory employer contribution.