Employer treats actually date of the paycheck as when compensation occurs not the end of the pay period (i.e. pay period ending 6/26 is paid 7/1). This normally is not a problem except at year end when someone might terminate employment say on 12/27 and then does not receive the final paycheck until say 1/4. The employer has been treating the 1/4 paycheck as comp for the year that it is paid in. So say the 1/4 paycheck was paid in 2004 they are treating that as 2004 compensation and giving the employee contributions on the amount in the paycheck and keeping them in the plan for the 2004 year. The final paycheck consists of normal comp and not severance pay or special bonus or vacation buyout. Is there any problem with this? Technically they did not complete an hour of service in 2004. There is no service req't on receiving any matching contributions or even non elective contributions.

Why answer the question myself when I can provide a link to some of the smarter board members posts?

http://benefitslink.com/boards/index.php?s...t=0&#entry51765