401(k) & match comp dont seem to correlate

[Guest SuzieQNEC]

I'm pretty sure I know the answer to this but was hoping to get a second opinion.

Match formula is 100% of 401(k) up to 6% of compensation.

Definition of compensation is standard W-2 comp.

Payroll takes 401(k) from all pay except for a special bonus at the end of the year which is included in W-2.

Therefore, the 6% cap on the match is based on pay which includes the bonus, even though no 401(k) was taken from it.

Sound right?

Pay used for 401(k) 100000

401(k) - 8% 8000

Bonus 20000

Total Pay 120000

Match 7200 (which appears to be 7.2% of pay used for 401(k)

[401king]

I'm looking at my document system right now and it appears that you can only exclude additional compensation for matching, but not include compensation that is excluded for deferral purposes.

For example: If salary deferral compensation excludes bonuses, but includes overtime, then my matching formula must exclude bonuses, but has the option to exclude overtime.

So it looks to me like anything excluded from deferral comp. has to be excluded from match. You cannot exclude bonus in deferral, and then include them in match.

I could have this all wrong and in the end its best to review the specs of the plan document's definition of comp for def & match (they should both be there).

[BG5150]

What does the document say about compensation? There are may companies that withhold (or don't withhold) correctly from bonuses or OT. Just because a payroll company doesn't wihhold 401(k) from bonuses doesn't make it right.