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Showing results for tags 'overtime'.
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Overtime Excluded in 401K Deduction Calculations
Mrs V posted a topic in Retirement Plans in General
My federal employer excludes overtime when calculating the amount that's deducted from my pay for 401-K plan contributions. They use my base salary. Is that correct? I thought it should be calculated on gross wages. -
Sorry if this is a newb question, but any help would be appreciated- given the new overtime rules going into effect I am concerned about some clients increased responsibilities if they don't exclude overtime my question is - If you only exclude overtime for matching contributions, do you still run compensation test? If so- assuming you pass - do you use that for ACP? or is there flexibility? I really want to make sure of what happens if we are only making a compensation adjustment to matching contributions. Thanks
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Employer has 1 HCE (the owner) and 75 eligible NHCEs. Wants to adopt a 3% safe harbor 401(k) plan. Owner's compensation is normally paid as $120,000 base pay and $150,000 year-end bonus. The NHCEs receive tips amounting to about 50% of their compensation. If the plan excludes bonuses and tips for purposes of all allocations, would this still retain its safe harbor status? If so, it seems like the employer is getting away with a safe harbor contribution of only 1.5% of compensation. We understand that it might eventually become top heavy with all the turnover they have, but that could take several years.
