BELR Plan Sponsor Alert
Revenue Procedure 2015-28 Presents Three New Methods for Correcting Elective Deferral Failures
Industry research increasingly points to the positive benefits of both automatic enrollment and automatic escalation features in 401k plans.1 Behavioral economists have demonstrated that implementing these programs result in higher participation rates and higher rates of participant deferrals.2
Yet at the same time, some plan sponsors have hesitated because of perceived harsh consequences for the mistakes referred to officially as “elective deferral failures”. An elective deferral failure happens when a plan sponsor fails to properly implement deferrals either that participants elect to make (affirmative elections) or those based on automatic features of the plans including automatic escalation.
Interested in reading our plan sponsor alert?
Tell us a little about yourself to learn more:
- How previously costly Correction Rules affected plan participants
- The difference between old rules and the newly implemented rules
- The new methods used to correct elective deferral failures