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Employers

December 14, 2016

Wisconsin Deferred Compensation: IRS Deferral Start Rule

Section 457(b) of the Internal Revenue Code, which governs the Wisconsin Deferred Compensation Program (WDC) and other deferred compensation programs, states that eligible employees must complete and sign a salary deferral agreement, also called a participant enrollment, to voluntarily defer a portion of their wages (compensation) into the plan.

On the enrollment form, employees designate the amount of compensation they wish to defer to the WDC from each paycheck. This form must be completed before the first day of the month in which the compensation will first be paid or made available. The initial deferral cannot take effect before the first day of the month following the employee’s completion of their enrollment. For example:

An enrollment form is received and processed by the WDC February 7, 2017.  The effective date entered will be March 1, 2017.  The enrollment will be sent on the March 1, 2017 file to payroll, and the first contribution should be remitted to WDC March 1, 2017 or later.

Please make sure you are in compliance with this federal rule. The best way to ensure this is to wait for the WDC enrollment report before sending contributions. All WDC employers should receive a report via the Plan Service Center website every payroll. This report communicates all changes (new, increase, decrease and stop) to deferral amounts to payroll. You receive an email when the report is ready to view. Please always view the report prior to processing contributions by logging into the Plan Service Center and clicking the Reports tab, then the Manage my Reports link. 

If you have questions or would like more information about enrollments or the WDC deferral process, please contact your local WDC representative, call the WDC Office at 1-877-457-WDCP (9327) and press 2, or send an email to wdcprogram@empower-retirement.com.

If you are not currently offering the WDC or are interested in consolidating your plans to the WDC for fiduciary reasons and cost savings for your employees, please call the WDC office in Madison at 608-241-6604 or toll-free at 1-877-457-9327 (press 2 when prompted).

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