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We are thinking of having a contest to boost participation in our 401k. We would be offering an iPod via a random drawing of those employees that would join the 401k. Are there any legal issues with d
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Contests

posted at 8/18/2010 9:51 AM EDT
Posts: 38
First: 7/8/2008
Last: 11/18/2010
We are thinking of having a contest to boost participation in our 401k. We would be offering an iPod via a random drawing of those employees that would join the 401k. Are there any legal issues with doing this?
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Contests

posted at 8/18/2010 11:09 AM EDT
Posts: 1103
First: 3/16/2007
Last: 8/19/2011
you mean like taxes or incurring the wrath of those already in the plan?
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Contests

posted at 8/18/2010 11:22 AM EDT
Posts: 38
First: 7/8/2008
Last: 11/18/2010
Taxes or just being able to do a raffle as an incentive.
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Contests

posted at 8/18/2010 4:33 PM EDT
Posts: 2146
First: 2/15/2006
Last: 9/14/2011
Don't call it a raffle -- as raffles are illegal in most states unless it is a 501(c)(3) charity event.

And yes, it would be taxable to the winner.

And I would allow current participants to go into the contest also.

But honestly, you might have better luck with making sure the employees understand vesting and company matching. If you don't match or have a long vesting schedule, an I-pod contest generally isn't going to generate a lot of interest. Especially since most people already have at least one!

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Contests

posted at 8/19/2010 8:34 AM EDT
Posts: 410
First: 1/26/2006
Last: 11/15/2010
Hi:
While raffle is probably not a good descriptor and may pique legal interest---the real issue is whether the process meets the definition of what the state or municipality considers an illegal raffle, lottery, etc., rather than what the process is labeled.

Dave Arnold, Ph.D., J.D.
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Contests

posted at 8/19/2010 11:35 AM EDT
Posts: 38
First: 7/8/2008
Last: 11/18/2010
Thank you all.
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