I realize that there is the "2 1/2 month rule" that can be applicable for including deferrals from after-year-end bonuses in the ADP test for the preceding year. However, what is the rule for the purposes of 404? If this bonus is paid on "account" of the prior year are the deferrals deductible in the prior year as long as the bonus is paid and the deferrals remitted in the 404 "grace period (until the date for the return)? I have read Rev. Rul 90-105 which prevents certain "gaming" of the grace period with regard to post-year-end deferrals but it doesn't seem to take on this question of a post-year-end bonus that is based on the prior year's performance of duties.

What year will the employer report it on the employee's W-2?

The subsequent year--the year actually paid.