Deferrals on Bonuses

[Pammie57]

A  client with a 401k plan  paid the HCE's bonuses and no deferrals were taken out.  Their document does not exclude bonuses from definition of compensation.   Do they have to calculate the deferrals?  If not, what type of notice/if any would the HCE participants need to sign saying they did not want deferrals taken from bonuses?  Should they amend document going forward to exclude bonuses?

 

[ETA Consulting LLC]

All of these fall under asking the client how they want their plan to operate and drafting the plan to reflect their wishes.  If bonuses are deferral eligible, then the participants' elective percentages should be withheld from deferrals.  If the participant wants to defer more, then they should adjust their elective deferral percentages for that payroll cycle that includes the deferrals (and then adjust it back for subsequent cycles).  Administratively, plan sponsors may give the participants the opportunity to make a separate election.  It's just a matter of knowing what you want to do, and ensuring the plan document reflects that. 

Good Luck!