Bonus and 401k

HRCathy

We are getting a bonus this year! My boss wants to give some employees the option of having some of their bonus put into their 401k. Is it a problem if he only offers that option to the managers and office staff, but not to the plant workers? I can't think of a problem with it, but I want to be sure I am not missing anything. The bonus is discretionary. Please let me know if I am missing anything here. Thanks!

lnelson

Yes, you can put all or part of the bonus into the 401K per ee disgression, as long as it does not exceed the annual limit, check your plan for amount.

As far as offering it to select few you cannot discriminate it must be offered to all participating in the 401k or none.

Congrats on Bonus.$$$
Lisa

HRCathy

I didn't even think of it the other way around. We have to contribute to the 401k for everyone. The ees can elect not to contribute, but the company can't make that determination for them. Thanks very much. This forum always makes me look good at work. Thanks!!!!

Don D

You didn't say, but you may have two separate plans, one for salaried, one for hourly; in which case you can indeed handle the bonus differently between plans.

Dutch2

All of the above are good, but best to first check you 401(k) Plan document. We have a standard "boiler plate" plan that states all wages, including any type of bonus, are treated the same, so the bonus money is handled in the same manner as a regular paycheck.
Congrats,
Dutch2

HRCathy

Thanks to you too Dutch. I did check my plan documents and you are correct. I should have done that first, but you guys are the first place I thought to look.

HRCathy

Hi Don. It is all the same plan. My boss isn't here to get the news yet, I'm sure he will be surprised with my answer. He was thinking of being a nice guy and letting the managers put some money into 401k. Not only is he required to contribute, but he will have to match also. And it was gratifying because the accounting manager asked me about it, but she assured me that she already knew the answer. So, as jaded as this may seem, I was happy to tell her she was wrong. There are way too many people around me that think they know my job. I barely know my job. #-o I will save further comment for the "Venting" forum....

Pork

[font size="1" color="#FF0000"]LAST EDITED ON 02-19-04 AT 03:39PM (CST)[/font][br][br]In our plan it is a "discretionary amount" at the employers determination; by rule it must be equally provided to the participants based on their current share of the entire plan networth. You will find that most 401Ks will have the plan owners with the largest share of the pie oriented toward the management and higher paid workers. Once given it will never come back to the employer. When a participant leaves and leaves these dollars on the table because they are not vested, they automatically leave these "discretionary dollars on the table". The plan board again splits that return, among all participant current members and again by the biggest share basis.

PORK