Can an employee “drop out” of participation and then re-enter after dropping out?
Yes. All employees who have met any age and service requirements and are in an eligible class of employees are technically considered “participants” even if they do not elect to participate in salary deferrals. Once an employee is an eligible participant, he/she can begin salary reductions or change the amount of salary reductions at specified time throughout the year. Most plans have quarterly change dates, that is, once a quarter employees can begin payroll deductions, change their percentage, or re-enroll if they have previously dropped out. Dropping out can generally be done at any time during the year.
