414(s) related

[Jakyasar]

Hi

I usually do not exclude anything from the salaries but the following came up as never had to deal with.

Owner just gets normal salary and never a bonus.

All rank&file get salary plus bonus where the total is reflected on gross w-2.

Owner wants to exclude everyone's bonus for pension purposes. Does this fail 414(s)?

Thanks

[Bill Presson]

Jak,

First - it would have to be in the document before the start of the plan year.

Second - all depends on the numbers and we didn’t get any.

Third - if the owner has w-2 in excess of the comp limit even after the bonus is excluded, the answer is very likely that it would fail. 

[Jakyasar]

Hi Bill

Thank you for your input and hope all is well.

Agree on your third point.

Assume the document states all bonuses are excluded.

Let's say as an example (if I understood you correctly)

Owner w-2 360k, gets 30k/month paycheck and nothing else.

Rank&file employees get 50k w-2 and 10k bonus for a total of 60k

Still fails?

[justanotheradmin]

yes, if Owner is the only HCE and the rank and file are NHCE, that fails 414(s). HCE has 100% of compensation included, NHCE only have 83.3%. That spread is too far apart. 

[Jakyasar]

Perfect and thank you both