Canadian Employee in 401(k) Profit Sharing Plan

[LCARUSI]

Question Posted by DESTRUO:

Does anyone feel uncomfortable about allowing Canadian employees who work in Canada to contribute "after tax" monies into a profit-sharing/401(k) program?

I am not as concerned about the "exclusive benefit rule" as I am about 415 and compensation that can be taken into account.

Dealing with a Controlled Group with operations in Canada.

Would appreciate any feedback. Thanks,

Oscar

[Guest Destruo]

Let me repose the question: Should a US corporation which has wholely owned subs in Canada and Hong Kong allow non resident aliens with no US income in its US tax qualified 401(k) plan. What if any problems do you see and are there other better options?

Thanks, Oscar

[Guest ESOPwizard]

There is no reason why the employer could not add NRAs to its plan,

but why would it want to? Foreign governments probably don't

recognize the 401(k) tax deferral, and you better be very careful

how you draft your document. (IMHO don't even think of using a

prototype.)

Things to think about: (1) witholding on distributions, and (2)

do you disaggregate for ADP/ACP testing?