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Just a simple prediction here that doesn't really help answer this question. Anyone who can't take more loans and needs to play these kind of games to pay bills is going to not pay it back 60 days later. So while your advice needs to be correct obviously it is all academic most likely.

The regulatory concern here is the discretionary match decision seems to be made after the end of the year and may not have been communicated at the time of 2017 elections (as would be the case with the safe harbor notice before the beginning of the year). If, after the end of the year, the additional match for 5-6% contributions was made based on HCE deferrals greater than what's provided for NHCE, the benefit formula would enrich HCE's and not meet safe harbor. It would be considered "foreknowledge" if HCE's were the majority of participants able to contribute 5-6%.

I usually go with the question asked in example 1: on 12/31 ask the person "where do you work"? In the case of the OP, the answer on 12/31 is "not at that company, anyway." Therefore no EOY employment.

the long winded answer from War and Peace...I mean the 2005 ASPPA Conference Q and A #32 was 32. What does it mean for an employee to be employed on the last day of a plan year, for example, in determining eligibility for a top heavy minimum contribution? EXAMPLE # 1: 7/31/2005 falls on a Sunday. If an employee's last day of work was on 7/29/2005 and the plan sponsor is closed on Saturday & Sunday, would the employee be considered to be employed on the last day of the plan year ending 7/31/2005? EXAMPLE # 2: Employee terminates employment on 2/23/2005 and is paid two weeks unused vacation pay on his last day of work. Would this employee be considered to be employed on the last day of the plan year ending 2/28/2005? EXAMPLE # 3: Following a hectic tax season, a CPA firm closes from April 16th through May 5th. An employee works on 4/15 but does not return to work when the company re-opens in May. Would this employee be considered to be employed on the last day of the plan year ending 4/30/2005? EXAMPLE # 4: 12/31/2004 was New Years Eve and many businesses were closed that day since January 1st was a Saturday. If an employee's last day of work was on 12/30/2004, would the employee be considered to be employed on the last day of the plan year ending 12/31/2004? This also affects plans which require employment on the last day of the plan year as a condition for sharing in the allocation of the employer contribution or forfeitures. I have never seen any guidance from the IRS or DOL addressing this issue even though the top heavy rules are twenty years old. Thanks!!! A. Being "employed" on the last day of the year is NOT the same as WORKING ON the last day of the year. Employment is a "relationship" with the employer. If you are on vacation and someone asks you where you work, if you are still "employed", you have an answer, even though you are not actually working during the vacation period. So, if 12/31 is a Sunday and it is a business that is only open mon-fri, unless someone has been TERMINATED from employment as of that day, they are still employed even though it is not a work day. So, your example 1: as long as the person wasn't terminated, he is still employed on 7/31 even though it's a Sunday and not a work day. Example 2: Employee is TERMINATED prior to the last day; he is not employed on the last day regardless of how much money he is being paid upon termination. He is NO LONGER EMPLOYED by the firm as of 2/23. Example 3: The question is always "is he employed" during that period, not "is he working". (BTW, seasonal employee rules were never issued, so let's not deal with "seasonal employees" here - besides, I don't think a three week shut down qualifies as "seasonal"). Let's just assume that everyone is on vacation. Are they FIRED (terminated) on 4/16? Unlikely. They are basically on a company wide vacation; they are still employees; they are supposed to come back on 5/5. Therefore, they are still employed as of 4/30. Example 4: Basically the same as opening comment about 12/31. Here, the company is closed 12/31 and last day of work was 12/30. None of that matters; what matters is "was he still employed on 12/31", and the answer is yes (UNLESS he was actually terminated on 12/30).

Caution. This isn't the first time that 12/31 fell on a weekend. Check for precedent.

Don't forget, she will have to repay the $10,000 withholding, not just the $40,000 check amount.

If the EE expects repayment, would a loan be more appropriate?

It sounds like the accountant is confusing IRA rules with Qualified Plan rules.

I’m saying that the start date is the employment commencement date which is the date the employee first completes an hour of service for the employer. The termination date is the date the employee has experienced a bona fide termination of employment.

I came to love Omni+ once I mastered it. I loved the flexibility of the custom calculators and the system over all. Its flexibility can be its draw back as other systems will do some of the work. I learned the 4k business on Pentabs and if you set up the plan specs right and loaded a good census 90+% of the time the first results you got from it were the correct results. Omni+ doesn't hold your hand like that but there was no allocation issue we couldn't program to solve once out group mastered teh custom calculators. I found their distribution system to be excellent.

http://sungard.com/sitecore/content/campai...o403bplans.aspx Very very relevant article on mandatory contributionsby Steve Forbes... Some 403(b) plans provide for mandatory contributions. In this situation, making the contribution is a condition of employment. Such a condition may arise from a statute or contract, or may simply be the employer’s policy. Both of these types of contributions reduce the employee’s wages for tax purposes. The FICA rules count these contributions as wages. However, neither type of contribution is an elective deferral for purposes of a 403(b) plan under Treas. Reg. §31.3121(a)(5)-2, which the Treasury finalized in November 2007. Accordingly, these contributions are nonelective employer contributions as far as the plan is concerned. Except for church plans and governmental plans, these contributions are subject to nondiscrimination testing under Code §401(a)(4). They are not subject to the universal availability rule (and cannot be used to satisfy that rule) or the 402(g) limit. Unlike conventional elective deferrals, these contributions are not included in gross compensation for purposes of 415 or other Code provisions which reference the 415 definition of compensation.