Severance pay and deferrals

[Guest Peggy806]

Employee will receive a lump sum severance after being laid off. His CPA told him that he could write a certified check to the 401k plan for deferrals from the severance pay. My understanding is that deferrals cannot be made from pay which is solely severance (does not include anything for sick, vacation, etc.). I am not even going to go into my opinion on the CPA telling him that he can write a check to the 401k plan. That, I know, is not allowed.

thanks for your input.

[rcline46]

Refer to the final 415 regulations, send the CPA a copy of the amendment to the plan. Let him figure it out.