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Guest 401KIA

US employees overseas

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Guest 401KIA

Hey all,

Have a 401k plan with compensation defined as 3401a. Now, said plan has lots of US citizen/resident alien employees all over the place, about half here in the US and the other half abroad. When these overseas employees are paid, they get paid by the local agency, be it euros or rubals or whatever. Plan does not specifically exclude employees working overseas or overseas compensation, just has 3401a comp. So basically my question is, can these employees use this compensation towards the 401k? I know there's a million treaties and exceptions etc., but as a general rule, can you defer/get allocation for this foreign comp? I know for 415 gross up comp you include this comp, so I assume its a yes for top heavy calculations, but what about regular match/deferrals/roth/PS? And would the foreign comp used be the gross comp paid out (converted for average currency rate for the year) or the gross taxable US comp portion? Cause i know there's even more exclusions for time overseas and taxes already paid overseas.

Any help greatly appreciated. Thanks.

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Guest 401KIA

Do I get a cookie for stumping the masters, or did I just happen to catch everyone on vacation? :(

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Guest Alonzo Church III

This sounds extremely fact specific to your situation == what does your plan document have to say about it?

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Guest 401KIA

Nothing unfortunately, its an IDD, just says 'compensation is defined as 3401a taxable from the source blah blah'... and excludes bonuses :unsure: not even excluded classes for ptps working overseas.

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Guest Alonzo Church III

If compnensation, for plan purposes, is genuinely 3401(a) comp, your employees who do not have US withholding are likely excluded. Problem is that plan documents can give you a number of different definitions for different purposes. You need to have the document reviewed by someone with an eye for that sort of thing, and go from there.

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