Employer Match - Severance

[waid10]

To qualify for the employer match in our 403(b) plan, a participant must work 1000 hours. Compensation is defined, for purposes of the match, as W-2 earnings. We have an employee that is terminating soon and has 1000 hours. He will be paid severance after his termination. My question is this: since his severance payments will be part of his W-2 earnings, is there any way that those payments should not be taken into account when calculating his match? There is no "last day of employment" requirement.

Thanks.

[masteff]

A place to start: look at your definitions of active participation, employment, eligibility and termination. It helps if the severance is paid on a later date than the last paycheck. We used our definition of termination to cut someone off after their final paycheck, so any subsequent bonuses, severance, etc were excluded.

[QDROphile]

You need to take into account the new section 415 regulations and whether or not the plan terms take into account the the section 415 regulations.