Under what condition should wages not be deferred?

Wages should not be deferred if the employee is covered by a specific plan because certain plans, such as retirement or benefit plans, may have stipulations regarding the timing of wage payments. In some cases, deferring wages can impact an employee's eligibility or contribution limits to these plans. For instance, if wages are deferred beyond the designated payment period, it may violate the terms of the plan or affect the employee's take-home pay and tax implications.

In contrast, new employees may still be in training or have probationary periods, contractors may have agreements stipulating when payment is due based on deliverables, and an employee's request to defer wages may indicate a desire for tax planning or income timing reasons, which could be allowed within certain parameters. Therefore, the specific coverage of a plan provides clear guidelines that typically prohibit deferral, emphasizing its importance in payroll management.