IRS issues guidance addressing the annual contriution of payments employees would receive for unused vacation or similar leave to an ongoing defined contribution plan, whether as employer contributions or elective contributions.
Document Excerpt
(1) Do the amendments described below to an existing qualified profitsharing plan requiring or permitting certain annual contributions of the dollar equivalent of unused paid time off cause the plan to fail to meet the requirements of § 401(a) and, if applicable, § 401(k) of the Internal Revenue Code (Code)?
(2) When is a participant required to recognize gross income with respect to the contributions to the qualified profit-sharing plan and payments to the participant as described below?
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