dan654083

just saw your discussion on disability payments by third party and thought logic might apply here. Employer pays employee credit card tips in cash to employee at end of shift with no deductions. Employee elects for 20% deferral into 401(k). Employer defers from regular wages but falls short of 20% of plan compensation. Compensation defined as W-2 comp. Is this a problem and is employer required to make up shortfall?

I have the same problem with my employer. Other than the replies here were you ever able to find any guidance.

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My employer (state of California) has a policy ( that they say they will not change) of cashing out credit card tips on a daily basis to employees. As such we do not have the opportunity of deferring that income into the 401(k) plan. Try as I might I cannot find any law that requires the employer to leave the tips on the paycheck if requested by the employee. It seems to me that this would violate the definition of compensation and would put their safe harbor 401(k) plan in violation. Any help is greatly appreciated. Thanks in advance