profil sharing election - deferral limits

[Guest benefitstudent]

Employer has a non-ERISA profit sharing plan. In the past, all profit sharing amounts were deposited into employees' 401k accounts. Under a new CBA employees have an election to take the profit sharing amount in cash or have it paid into their 401k account.

If paid into a 401k account, against which limit is that amount charged? Is it treated like a salary deferral and charged against the $17,000 deferral limit or is it treated as an employer contribution and counted only against the aggregate $49,000 annual addition limit?

Are there any other issue raised by the introduction of the employee election about how to treat the profit sharing payment?

Thanks!

[ETA Consulting LLC]

Are there any other issue raised by the introduction of the employee election about how to treat the profit sharing payment?

Thanks!

You've identified the main one. A 401(k) is a CODA (cash or deferred arrangement); an employer contribution made pursuant to the election of the employee. Any notion of such option being provided to either contribute to the plan or receive in cash is considered an elective deferral.

Good Luck!