Client has a 403b plan which provides for a 10% profit sharing contribution. Client deposits the PS each pay period. (There are no allocation conditions to receive an Employer contribution.) Employee A terminated employment during the plan year. She was paid $4,000 in unused vacation pay with her final paycheck. I think this $4,000 is entitled to a PS allocation as well. Client is calling the pay 'severance' and did not contribute a profit sharing allocation for this pay.
What are your thoughts?