Common use of Elective Deferrals Clause in Contracts

Elective Deferrals. You may permit your employees to make elective deferrals through salary reduction or on the basis of bonuses that, at the employee's option, may be contributed to the SEP or received by the employee in cash during the year. You are responsible for telling your employees how they may make, change, or terminate elective deferrals based on either salary reduction or cash bonuses. You must also provide a form on which they may make their deferrals. This requirement may be satisfied by use of the "Model SEP Deferral Form" provided for this purpose at the end of these instructions. You may instead use a form that sets forth, in a manner calculated to be understood by the average plan participant, the information contained in the Model SEP Deferral Form. Remember that no deferral election may be made with respect to compensation already received.