SIMPLE contributions…

we have a participant of a SIMPLE plan and is currently looking to defer $450 from each payroll (gets paid once a month)and has completed the deferral form as such. Sometime between now and December he would like to max out to the $12,500. Would this participant need to complete a new deferral form maxing to the $12,500 and then again to change the deferral back to $450.

Hope that is making sense to you.

Thanks!



Other than the annual election period, changes to the contribution rate can be made subject to the plan provisions, eg the plan could allow quarterly changes to the salary deferral amount. The only change the employer MUST accept during the year is a termination of the entire deferral.



This employer allows employees to make salary reduction elections or modify prior elections on a daily basis.  I would assume the employee would have to sign a new salary reduction agreement each time he wants to make a change?OR can we instead hand write on the election form “will defer from my compensation the maximum I can defer without exceeding the limit”



I doubt that the plan would accept that wording. They would probably require a new reduction agreement with either a dollar amount or a % of salary figure, then another new agreement anytime that figure needs to change. Regardless of how high the pay period contribution is, the plan should automatically stop contributions when the dollar limit has been deducted.



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