Bruce1 Posted April 16 Posted April 16 I have an employer from a small company who didn't withhold any 401k deferral and match for a large bonus paid to employees. Employees missed out on a few thousand dollars in match, as well as deferral. Question: 1. Can an employer go off a verbal consent to not withhold money from this pay? (Their deferral forms don't have an election for bonuses, thus all pay would include an ee's deferral election) Solution: 1. A 50% QNEC for missed deferral (plus earnings), and a 100% QMAC based on missed deferral (plus earnings)?
Bruce1 Posted April 16 Author Posted April 16 Would it be an acceptable practice for the employer to go to employees and have them sign a deferral election form retroactively stating whether they wanted to make deferrals off of bonuses? The employer could then make corrective contributions to employees who genuinely wanted deferrals coming out of their bonus pay?
Bri Posted April 17 Posted April 17 Of course not, but does the plan document address separate one-off paychecks separately with regard to deferral elections?
Artie M Posted April 17 Posted April 17 When did the failure to take the deferrals out of the bonus occur? If less than 3 months ago it seems like this could fit under the safe harbor correction for any elective deferral failures (including Roth contributions) that don't exceed 3 months. Just my thoughts so DO NOT take my ramblings as advice.
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