Year End Deposit of Deferrals

[Guest JanetGS]

Hi, I'm still new to managing a retirement plan and I have a question about the deposit of deferrals.

A client's last payroll date is December 26, 2013. The deferrals might not get deposited until after the end of the calendar plan year. Are those deferrals from that payroll date included in 2013 or 2014 testing?

I think that since the employees deferrals are based on pay earned in 2013 instead of 2014, those deferrals deposited in the trust in the beginning of 2014 are included in 2013's testing.

Thanks

[BG5150]

What is the paycheck date? People use "payroll date" differently. Some use it as that date through which the person is being paid. Some use it as the actual day the person gets paid.

For example, some companies pay for work done through Wednesday, put the people get paid on Friday. For plan purposes, "payroll date" in this case is Friday.

Thus, you might be paid for work through December 30, but if you don't get your check until January 2, then it's January compensation.

Simple question: which W2 will it be on?

[Guest JanetGS]

What is the paycheck date? People use "payroll date" differently. Some use it as that date through which the person is being paid. Some use it as the actual day the person gets paid.

For example, some companies pay for work done through Wednesday, put the people get paid on Friday. For plan purposes, "payroll date" in this case is Friday.

Thus, you might be paid for work through December 30, but if you don't get your check until January 2, then it's January compensation.

Simple question: which W2 will it be on?

Thanks for answering. That does make sense to me that W2 does govern. i was looking at the master plan document for help and I just got overwhelmed.

[QDROphile]

While you can use a simple W-2 rule, there is flexibility. For example, a plan can treat a payroll period that begins December 30 as included in that year even though the end of the period and the pay day are in the next year. Consistency is important and abuses are still vulnerable.

[Guest JanetGS]

While you can a simple W-2 rule, there is flexibility. For example, a plan can treat a payroll period that begins December 30 as included in that year even though the end of the period and the pay day are in the next year. Consistency is important and abuses are still vulnerable.

Thank you QDROphile. Consistency is very important to me b/c if there's ever an audit, I do not want to give the impression that the plan's operation is all over the board.