Canadian residents as participants in US 401(k) plan

[lexi]

We have a US parent that just incorporated a US subsidiary that will be conducting business in Canada. The sub is going to be physically located in Canada and will be employing Canadian residents, whose work will be confined to Canada.

The sub would like to include the Canadian residents in the 401(k) plan. I have looked at the US-Canada tax treaty, and everything checks out with that. However, here are my concerns:

1) How does an EE from Canada, on Canadian payroll, make an elective deferral of his/her Canadian salary to a US 401(k) plan? Can a Canadian company withhold Canadian compensation nd contribute it to a US 401(k) plan; and

2) If a Canadian EE does elect to contribute to the 401(k) plan, how could they do so on a pre-tax basis (presumably the Canadian treasury is going to tax it at Canadian rates since it would not be a "pre-tax contribution" for Canadian tax law purposes)?

Does anyone have any thoughts or experience with this kind of thing?