Possible CODA

[justatester]

Hi,

I have a source in the plan that the employer states is a employer contribution and we think it is a pretax contribution (although this is technically an er contrib as well).

In the plan document: "Deferrals of ABC or Profit Sharing. A Participant may elect to defer and designate as his/her Deferred Savings all but not less than all, of the ABC and/or Profit Sharing. Any Deferred Savings elected to be deferred under this section shall be deducted from the amounts otherwise payable to the Participant under the ABC and/or Profit Sharing, and shall be paid to the Trustee no later than 15 business days."

Would this contribution be treated as "pretax" for ADP purposes?

[david rigby]

I hope that is not an exact quote.

Is there a plan merger somewhere in this?

What does the plan's attorney say?

[austin3515]

There is nothing technically wrong with it. It's the textbook definition of a CODA and why technically 401k is considered an "employer contribution." Well, I guess this is worked backwards, but the point is the same. Your choosing between an employer contribution to the plan or a bonus.

It is a pre-tax deferral, subject to 402g and ADP testing.

[david rigby]

There is nothing technically wrong with it.

There is lots wrong with it. Grammar, punctuation, possibly spelling, probably one or more omitted words, all of which leads me to caution.

[austin3515]

Ah, ok, I was not grading on grammar, only substance!