409a payments

[Mike318]

401k plan excludes DOP comp only.  Can/should comp payments to 409a plan be included as compensation for 401k plan?

[Larry Starr]

15 hours ago, Mike318 said:

401k plan excludes DOP comp only.  Can/should comp payments to 409a plan be included as compensation for 401k plan?

Might help to NOT use abbreviations that some of us might not understand.  What is DOP? Also, what is a "compensation" payment to a 409A plan?  I think that needs better explanation as well.

[Karoline Curran]

DOP=Date of Participation I think, Larry, but he worded it incorrectly. He's trying to say the Plan excludes compensation prior to the Date of Participation.  Of course, I could be wrong about what he's trying to say so I'll go back to my cave!

 

[CuseFan]

Payments from a 409A plan that are taxable to a participant could be wages, depending on plan definition.

Salary deferrals (or other contributions) to a NQDC 409A plan would not be considered compensation unless the plan specifically allowed for their inclusion but that would be custom language, not a safe harbor definition, and could create testing issues because qualified allocations would be based on compensation higher than statutory/testing compensation.

The salary deferral add-back does not include 409A NQDC deferrals. Also note that a person's 409A salary deferrals, could take them from HCE to NHCE.

[Luke Bailey]

NQDC plan amounts are 415 comp only to extent paid in the year, not on account of separation from service (e.g., timely deferral election deferred for 3 years, 3 years is up and participant still employed). If not 415 comp, you are going to have imputed compensation, and it really won't work. As others have said, check your plan language. Do not add to your plan if not there, because will bust your determ or opinion letter. Not really practical in any event, except where can be treated as 415 comp, as explained above.