catchup for 2012

[Monica Barnard]

Company sponsors Safe Harbor 401k plan and has executive who wants to make catchup contribution for 2012. I advised that it must be from pay. Company is about to pay bonuses, and plan does allow for separate election for bonuses. I also advised that in order for catchup contribution to be credited to 2012, the bonus would have to be included in 2012 pay. Is this correct? Is there a way for bonus to be included in 2013 pay but catchup credited for 2012?

Apparently Company has already finalized W-2s and all tax report, and doesn't want to redo everything.

Thanks for your help.

[Jim Chad]

If it is a calendar year plan, then I believe the answer is no. There is no way to legally do s 2012 catch up now.

[Guest LLHarlow]

I disagree - there is a provision of 401(k) that states elective deferral from a bonus paid in the first 2 1/2 months of the new tax year which are attributable to the prior year are considered deferrals for the prior year. The question is how you report it. I do not believe an amended W-2 is necessary so the deferral will go on the current/new year's W-2. I believe this essentially makes the participant's 402(g) limit for the current/new year, their limit ($17,500 or $23,000) plus the deferred bonus. I have this situation and cannot find instructions on reporting it on the W-2 so I'm leaning towards using the USERRA reporting instructions and codes. Of course the plan document rules so look at how elective deferrals are defined. If you're lucky, it will simply refer to 402(g). If you need a citation, email me directly at lharlow@burkecpa.com.