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Yes to all the above. Companies have until their federal income tax due date (including extension) to deposit profit sharing/safe harbor contributions/discretionary matching contributions into your account.

It should totally be billable but it doesn't violate any terms of the plan and doesn't give a benefit not owed to the participant so I don't see how you can say it's not qualified. Move the vested and non-vested part to the alternate payee account. Only pay the vested portion each year. It's not rocket science.

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).

Just a thought - I recall old 404 regulations would mention the adjustment to the asset for contributions deducted but not made. I always thought this was exactly for situation described in the original question. Here is also 14:18 from DB Answer Book Contributions to a defined benefit plan can be deducted for a taxable year if the contribution is deposited to the plan's assets no later than the due date for filing the tax return for that taxable year (including extensions). [ I.R.C. § 404(a)(6)] Although the deposit may be timely for deduction purposes, it may not be timely for purposes of satisfying the minimum funding standard. Conversely, a deposit may be timely for purposes of satisfying the minimum funding standard and may not be timely for deduction purposes. Example. Fred Flintrock is a sole proprietor and sponsors a defined benefit plan. If his tax return for 2000 is not on extension, he must make contributions by April 15, 2001, in order to deduct them on his 2000 tax return. If Fred makes the contributions after April 15, 2001, but before September 15, 2001, the contributions will be timely for purposes of satisfying the minimum funding standard for 2000 but must be deducted in 2001. Conversely, if Fred's tax return is on extension until October 15, 2001, and the contributions are made on this date, they will be timely for deduction purposes but not for purposes of satisfying the minimum funding standard for 2000. If the employer files for an extension of time to file its tax return and then files its return before the original filing date, the due date for deductible contributions is the extended due date. [ Rev. Rul. 66-144, 1966-1 C.B. 91] If, however the employer first files its tax return and then applies for an extension of time, the IRS has ruled that the extension is not valid for purposes of increasing the time for making deductible contributions to the plan. [ Ltr. Rul. 8336006] I think ERISA Outline has some example like this as well. So nothing against Gray Book 2011-7, but I like Effen's reply - it should be the clients/accountants call.