Brian Gallagher Posted July 10, 2003 Posted July 10, 2003 Is there anywhere in the regs that say that severance pay is not included for comp in 401(k) plans? Remember: two wrongs don't make a right, but three rights make a left.
david rigby Posted July 10, 2003 Posted July 10, 2003 Numerous discussions on these Message Boards that indicate "No". IRS reasoning is that only "employees" are entitled to make deferrals under 401(k). For clarity and documentation, your best bet is to use the Search feature. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
Harwood Posted July 10, 2003 Posted July 10, 2003 Severance pay, if paid after termination, is not eligible for a 401(k) deferral, since you must be an employee to defer. However, severance pay is compensation for most testing purposes.
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