Common use of Elective Deferrals Clause in Contracts

Elective Deferrals. May Be Disallowed You are not required to make elective deferrals to this SEP-XXX. However, if more than half of your employer's eligible employees choose not to make elective deferrals in a particular year, then no employee may participate in your employer's elective SEP for that year. If you make elective deferrals during a year in which this happens, then your deferrals for that year will be "disallowed," and the deferrals will be considered ordinary XXX contributions (which may be excess XXX contributions) rather than SEP-XXX contributions.