Is there a law stating that payroll-deduction changes cannot be restricted?
TB: You’re required to follow the provisions of your plan document. Restricting employees to changes only twice per year is legally permissible if this is in agreement with your plan document. I personally recommend permitting employees to change their contribution rates effective as of any payroll period. You have the plan for the benefit of your employees. This added flexibility enables employees to structure their contributions around their needs. For example, an employee may want to increase his or her contributions when he or she receives a raise, or when Social Security payments end. Most plans give employees the opportunity to change the contribution rate effective as of any pay period. Many also permit employees to make separate contribution selections when bonuses are paid. You undoubtedly hire employees from other companies that have 401(k) plans, which are much more flexible than yours. These employees realize that your decision to limit them in this manner is arbitrary. As
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- Is there a law stating that payroll-deduction changes cannot be restricted?
