Deferred compensation and eligibility for PS allocation

[cpc0506]

Client has informed us that the President of a Non-profit, which sponsors a 401k plan, will be retiring on 3/31/16. On 4/1/16 and 4/1/17, the Non-profit will be paying the President X dollars in deferred compensation. Is this money eligible compensation for plan purposes in the 2016 plan year? What about the 2017 plan year?

FYI: the plan is a safe harbor 3% plan.

[rcline46]

Find the final 415 Regulation amendment to the plan, that will answer your questions. If the plan has been restated for PPA, the answer is buried in the document under Compensation.

Now if it were a 403(b) plan, and the document so provided (again - a document issue) then yes.

[jpod]

If I may change the subject, because I am curious, is the intent that the 2017 installment won't be taxable until 2017 (rather than 2016 or earlier)? If so, with the President's termination of employment occurring in 2016, what is believed to be the "substantial risk of forfeiture" that defers taxation until 2017?

[XTitan]

What was the "substantial risk of forfeiture" that delay taxation until separation?

[jpod]

I am giving them the benefit of the doubt that a voluntary resignation prior to 3/31/16 resulted in a forfeiture, but you're right maybe I shouldn't have done that.