Amend Compensation Definition for (k)

[12AX7]

Traditional (k) Plan. No compensation exclusions for deferral, match and profit sharing. No accrual provisions for either match or profit sharing. I will hold to the theory that I cannot amend the definition of comp for match or profit sharing for the current plan year. However, is it possible to amend the comp definition for the salary deferral contributions during this plan year? Bonuses are paid to the employees at the end of the year, and the client for whatever reason would like to exclude the 2011 year-end bonuses from the deferral portion of the plan. Can this be done, or is the right to defer on the entire gross wages a protected benefit in the plan? Thanks.

[12AX7]

I'm bumping this post in hopes that someone would have insight on this question. Thanks !

[Bird]

Well, I don't see a problem with it but I have no cites to back it up. For the most part I don't like to see such exclusions and would try to understand the reasoning and argue against it. fwiw

[12AX7]

That's my problem. I cannot find a cite or other guidance on this point. On the surface, it appears that something is to be taken away by the amendment, just as if the comp definition were changed for the employer contributions, where there is no accrual requirement. This client is difficult to reason with sometimes, so it's better to try and find a solution.

[Bird]

Well, if the bonus hasn't been paid yet, then I don't see it as a cutback to take away the right to defer from it. It's different, I think, from earning the right to a future PS contribution under the terms of the plan as soon as you work an hour (or 501 or whatever).