Salary Continuation Considered for SH 3% Contribution?

[chris]

Safe Harbor 401k plan provides for the 3% nonelective contribution. Plan amended for 415 Final Regulations and thus includes adjustments for amounts paid post-severance for : 1) regular pay w/i 2 1/2 months or the end of the limitation year; 2) leave cashouts; and 3) deferred compensation (as described in the Reg.). Employment agreement provides for salary continuation to be paid to terminated employee over 36 month period. The salary continuation would not fall under the "regular pay" prong, nor the "leave cashout" prong. As for "deferred compensation" prong (as well as the "regular pay" prong), the amount would not have been paid if the participant had continued in employment. Thus, I do not see that the salary continuation is includible as compensation form purposes of computing the 3% non-elective safe harbor contribution. Any thoughts appreciated. Thanks.

[Lou S.]

I agree with you. I don't see it as eligible under 415.

[chris]

Thanks Lou.