414(s) related

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

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. 

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?

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. 

Perfect and thank you both