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I would be very careful with any kind of settlement payment. Just because it sounds like back pay does not mean that is what it is. You have to look at the specifics of the settlement. Back pay is compensation you were supposed to get for services rendered but did not get. The original post does not mention anything about the participant being underpaid, only that she threatened to sue for wrongful termination and the company ended up settling during arbitration. That sounds like severance to me, which is a payment for the termination itself, and not services rendered.

If the plan was a prototype style document with an adoption agreement, I'd be willing to do basic amendments to the plan without restating, assuming it's just a question of changing which box is checked. The preferred practical answer is to restate as soon as possible, though, since it's easier on staff to use "our" document. That said, I'm unwilling to restate for free and uncomfortable charging for a restatement just for my own benefit.

That rule changed a long time ago. But it may well be what the CPA is thinking of.

You might want to review this: https://www.irs.gov/pub/irs-drop/rp-16-51.pdf If the amount is small, under $100, you don't have to seek recoupment nor notify the employee that the amount is ineligible for rollover. Over that, you try and get the money back and you reissue the 1099 showing the ineligible amount.

One other observation, which may or may not be important depending upon the client's wishes for plan design. If they want to allow in-service distributions of employer contributions, especially for hardship (and many do) then the 403(b) is useless when using custodial accounts. You can't take in-service distributions from employer contributions to 403(b) custodial accounts unless disabled or age 59-1/2, whereas under the 401(k) you CAN allow in-service distributions on the employer contributions. P.S.- I'm ignoring the possibility of 12/31/88 funds for purposes of my general observation above.

I suppose it might make a difference if the commissions are for a commissioned salesperson, where ALL of their comp is based on commissions, or if it is an occasional thing. I don't think there is a hard and fast rule - just facts and circumstances. But under your description above, if commissions are not excluded under the compensation definition of the AA, then the client has to include them regardless. In other words, if they aren't excluded under the normal definition in the AA, and the Administrative Procedures section says that irregular pay is used for deferral purposes UNLESS the participant makes a special election, and the participant hasn't made such a special election, then the fact that the comp might be "irregular" is immaterial.

Haven't seen any of the movies. My policy is to never watch a movie made from a great book. No movie can match the experience of great books, even though the movie might be objectively great. And although I've heard rave reviews about the movies from my kids, I've also heard enough to know that the movies (as they all do) take certain liberties and deviate from the books, which I find most distressing.

I appreciate all the info posted in this thread.I am 63 going on 64.I was surprised as I had an emergency pop up where I was injured pretty badly and was out of work for a year.Needless to say the amount of worker comp was 30% of my normal income. My credit was in ruins.From reading this before my credit was destroyed with a credit score of 510.I forgot about my 401k I did not have a great amount in there but I had enough to make a withdrawal and pay my creditors.I always have paid my mortgage but all of my other bills were way behind, Now my credit score has moved up to 670 and I am working again even though I am only making 60% of my old income. Thank you it shows people can learn something from such and old post Thanks

If it is a settlement or severance pay as Lou points out, it shouldn't be plan comp as it is not pay for services. It will be very important to find out exactly what her payment is, but it shouldn't be used simply because they run it through payroll.