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I think if someone had earned income and was still a partner at the end of the year I would consider them as employed.

For the cost of just a few pennies per day for each $1,000 that is late, use the payroll date. If you're investigated by the DOL, they now can't question the choice regarding the loss date. Using the pay date eliminates that scrutiny.

I thought FDG's conundrum was a non-last participant who simply would not deposit a check? How do you solve that problem by driving to his house unless you also throw him in the trunk of your car and drive him to the bank?

But that is focusing on the profit sharing allocation and not the safe harbor. My entire comment was geared toward the safe harbor contribution. To circle back to the regular profit sharing is a non-sequitur, But just to be clear, if the employer is determining eligibility for the regular profit sharing contribution or determining eligibility for the safe harbor contribution based on employment status at time of contribution and that time is after the end of the plan year the plan will fail scrutiny if the IRS examines whether contributions satisfy the IRS' rules regarding definitely determinable benefits. Note that the above concedes the issue that the plan document somehow provides the flexibility described.

Tell the person to just endorse the check and send it to me...

I used to do some in-house education classes at one of my old jobs. And to illustrate the point further, (this was before the proliferation of camera phones, so no selfies, Thank God), I said I dumped the money on the bed and rolled around naked on it. (Someone said something to HR and I was told to find another anecdote for my class. True story.)

An extra "like" for the use of wicked long time on a dragging Friday!

WEll, this is what Austin said, and he seems to know what he's talking about: Whether the payments come from payroll deductions or your savings account is completely irrelevant. It is literally the same question as to whether the money comes out of your right pocket or left pocket. You got the money tax free, paying it back with after-tax dollars is even steven. I think if you think about it for as long as I have (a wicked long time!) it will start to make more sense...