DECEMBER QUESTION
Q.
When
an employee who is a military reservist is activated for
the current crisis, how do I handle his 401k contribution
and our company match?
A. Since
the reservist must not be treated
as having incurred a break in employer
service, the military service is
treated as service for vesting
and benefit accrual purposes.
The
employer must make employer contributions on behalf of an
activated employee on the same basis as for any active employee.
If employee 401k contributions are not being made during the
military service, then the employer has no matching responsibility.
However, upon return, the employee has a special "make up"
period to cover the period of absence. This "make up" period
is the lesser of 3X the length of the military absence or
five years. If the employee uses this special period to make
up missed contributions, then the employer must match these
made up contributions per the normal plan matching rules.
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