Except for some limitations applicable to safe harbor employer contributions and automatic enrollment provisions, employers may freely change their 401(k) plan features by adopting an amendment to their plan.
While your employer has the right to amend your plan at any time, any such amendment cannot reduce the benefits you earned prior to the effective date of the amendment; you have a right to all retirement benefits that you have already earned. This article explains how changes made to your Guideline 401(k) plan may impact you as a participant.
For detailed information about your Guideline 401(k) plan features, refer to your updated Summary Plan Description. If you have any questions about your plan, don’t hesitate to contact Guideline Support.
Employer Non-Elective Contribution
Non-elective contributions are contributions your employer makes to your 401(k) plan each pay period regardless of whether you participate in the plan. Changes to your plan’s non-elective contribution rate may mean that your employer has decided to start making non-elective contributions, discontinue making them, or change the rate at which the company contributes to your plan. Unless stated otherwise, changes generally take effect during the next payroll cycle.
Employer Matching Contributions
Employer matching contributions are contributions your employer makes to your plan based on the rate of your deferrals each payroll period. Changes to your matching may mean that your employer has decided to commence or discontinue employer contributions to your plan, or change the matching rate or limit.
Unless stated otherwise, changes generally take effect during the next pay period. If your employer offers a match, you should always try to contribute up to the maximum match limit so you don’t miss out on “free” money. Even if your match has been reduced or discontinued, we highly recommend that you try to contribute up to the annual IRS limit to ensure you’re saving adequately for retirement. You can change your deferral rate based on changes to the employer match here.
Annual (True Up) Matching Calculation
Your employer may choose to change the way that matching contributions are calculated from an annual basis to a per-payroll-period basis.
This means matching contributions previously calculated based on your employee deferrals over the entire year are now calculated based on the amount you defer during each payroll period. To maximize the matching contributions you receive, you may wish to update your deferral rate to contribute evenly over the course of the year.
Profit Sharing Allocation
Profit Sharing is a discretionary employer contribution made to all employees who are eligible on the last day of the calendar year. Your employer can decide each year whether and in what amount to make a profit sharing contribution. Changes to your profit sharing allocation means that your employer has changed the formula by which profit sharing allocations are made.
Changes generally take effect for the profit sharing allocation made after the end of the year.
Employer contributions to your plan may be subject to a vesting schedule. A change in your plan’s vesting will only affect future contributions; the vesting of employer contributions already received will not be affected.
Eligibility to participate in your plan can be limited to those who have reached a certain age (between 18-21). Changes to the minimum age of participation for your plan will not affect your eligibility if you are an existing participant in the plan, and instead will apply only to those who were not yet eligible to participate.
Required Months of Service
Eligibility to participate in your plan can be limited to those who have worked at the company for a certain period of time (up to 12 months). Changes to your plan’s service requirement will apply to participants who have not yet entered the plan and will not affect participants already in the plan.
Allow Union Employees
Unions typically negotiate benefit packages for their members. Your employer may choose whether or not to include union employees in your plan. If you are a union employee and are unsure if you are eligible to participate, feel free to contact Guideline Support.
If your company workforce includes employees leased from a leasing organization or staffing agency, your employer may choose whether or not to include leased employees in your plan. If you are a leased employee and are unsure if you are eligible to participate, feel free to contact Guideline Support.
Participants who do not enroll or opt out of the plan are automatically enrolled at the plan’s default contribution rate when they become eligible.
Changes to the default contribution rate apply to participants who were automatically enrolled in the plan prior to the effective date. If you selected a deferral rate or opted out of the plan, this change will not affect your enrollment.
Automatic Enrollment (EACA) Refund
If your plan includes an Eligible Automatic Contribution Arrangement (EACA) and you are auto-enrolled and do not wish to participate, you may request a refund within 90 days of the first payroll in which an automatic contribution was made. For more information about your EACA plan, refer to your automatic enrollment notice.