Vacation Buy Back and 401(k) Deferral
February 2, 2020
Last year when everyone received their vacation buy back payment, there was some confusion caused when, as a result of an oversight, the company did not defer money into our defined contribution plans as they should have. Keep in mind, vacation buy back results in us taking pay in lieu of vacation. However, in either instance, money received during an actual vacation or as vacation buy back is considered earnings and is therefore subject to not only deferral into or 401(k) but also the match negotiated on our behalf.
This year, management has correctly deferred money from our vacation buy back payments into our defined contribution plans based on the percentage each individual designated. The company will also apply the matching component to those vacation dollars we have earmarked for deferral into our retirement plan savings account.
If you’d like to refresh your recollection of last year’s event, please review the article from our MEC website and the steps that were taken after the vacation buy back payments were made to ensure the matching dollars were contributed on our behalf.