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Posted

So my question is concerning an employer who would like to give his employees money when the plan starts (after meeting the eligibility requirements). This is a 401(k) Profit Sharing Plan, and this would be money that he is giving them as bonus or profit sharing from prior work they have done. Is this possible and are there limitations on how much he can give to each employee? The employer would like to give the employee that have been with him the longest a little more. I'd appreciate any feed back. 

Posted

Short answer, yes, it is generally possible. There are a LOT of plan document and design issues that must be addressed, including compensation period and compensation definition, coverage/nondiscrimination issues, 415 limits, effect on top heavy, etc., etc.

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