U.S. Citizen with Foreign Source Income Wants to Participate in 401(k)

[Guest 91smithie]

I have a U.S. Citizen employee who works for a foreign office of a U.S. LLP (foreign office is actually separate related general partnership). Assuming plan could be amended to permit participation, does Code Section 911 limit the maximum amount which the employee may defer (for example, if employee is expected to make $200,000 in 2002, does exclusion of $80,000 in 2002 under Code Section 911 make the compensation used for purposes of deferrals actually $120,000?)

[Guest Harry O]

There is nothing in the law that prevents using all compensation (up to $200,000), even compensation excluded under section 911. Just make sure that the plan document doesn't somehow exclude this pay.