kmhaab Posted March 29, 2021 Posted March 29, 2021 What is a "reasonable period" of time for a plan sponsor to implement salary deferral election changes? Plan states that an election to modify a salary reduction agreement "will take effect within a reasonable period following such election." Typically, election changes would take effect on the next semi-monthly payroll date (i.e. 1-2 weeks). But due to an administrative error election changes made earlier this year did not take effect for up to 12 weeks (i.e., an election change made 1/1 to increase deferrals was implemented 3/31). I'm analyzing whether the election changes were not implemented within a reasonable period, resulting in an Election Deferral Failure under IRS rules. Any thoughts would be appreciated.
Bird Posted March 30, 2021 Posted March 30, 2021 17 hours ago, kmhaab said: due to an administrative error That answers your question - it was an error, and not due to some reasonable implementation process (which would, I'd think, be manageable by the second pay period at the latest). Ed Snyder
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