403b contributions from severance pay?

[Guest nahe3]

Hi, I work for a small non-profit which will provide some severance pay based on years of work, etc. to employees laid off due to a funding termination. Can the employees ask the employer to contribute part of their final check for severance pay or for vacation pay to their 403b account. The severance pay is taxable and I believe is considered compensation under federal law. Thanks!

[david shipp]

The IRS has indicated at seminars (i.e informally) that severance pay as you describe it was "earned" in prior years and thus cannot be taken into account as includible compensation for the current year.