If the plan contains an eligible automatic contribution arrangement (EACA), it may allow an employee to withdraw automatic enrollment contributions. The employee must elect to withdrawal automatic enrollment contributions within the time stated in the plan (30 - 90 days from when the employee first had any automatic enrollment contributions deducted). An employee's election to withdraw his or her automatic enrollment contributions is effective on the earlier of these two dates after he elects: the pay date for the second pay period or 30 days after the first pay date If an employee elects to withdraw automatic enrollment contributions, they forfeit any matching employer contributions that would've been made for the automatic enrollment contributions. The plan treats these forfeited amounts the same as other forfeitures under the terms of the plan and doesn't refund them back to the employer. The plan may state that the employer doesn't have to make matching contributions for automatic enrollment contributions that are withdrawn before the date that the plan otherwise allocates its matching contributions. The plan must use its ordinary procedures when distributing automatic enrollment contributions and not charge higher fees than it charges for other distributions. The employee must consider any pre-tax automatic enrollment contributions he withdraws as taxable income in the year in which they are distributed. The withdrawn amount is not subject to the additional 10% tax that normally applies to early distributions from retirement plans. An employer can't condition an employee's withdrawal of automatic enrollment contributions on the employee making future contributions. The employee can always choose to make future contributions to the plan by submitting a new election form to the employer. Return to FAQs
