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Posted

Do employee military leave make-up contributions have to be made on prospective W2 pay or can the employee write a check to the 401k account? For example it is 12/19 and employee wants to contribute $18,000 for 2016 and $18,000 for 2017. She has 2017 W2 income after returning from military. Does the $36,000 contribution have to be make from her remaining 2017 payroll or can she write a check?

 

Thanks!

Posted

I have never seen it done and can't cite anything saying "yes" or "no". I know so far no help am I?  :D

There is one practical question that comes to mind quickly.  If these are catching up pre-tax 4k deferrals isn't' the money used to write a check after-tax?  If so, isn't she setting herself up to pay taxes twice on the money? Or is the plan to note a basis in her account?  But if the plan is treating this as after-tax money does the plan allow that source in the plan? 

Posted

I don't have time to do any research on this question, but my recollection is that it must still be a "deferral" - in other words, she can't write a check. But don't take my word for it!

  • 10 months later...

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