Final regulations issued under Section 415, which are effective for plan limitation years beginning July 1, 2007, allow employees to defer certain payments they receive after they've terminated into their old 401(k) accounts. In addition, the IRS released final regulations governing Roth 401(k) distributions. The Roth 401(k) regulations are generally effective for tax years beginning after January 1, 2007.
Under these final regulations, employees who terminate employment can pile more money into their former employers' 401(k) plans. Catch: Employees must receive payments by the later of 2½ months after their termination, or the end of the plan limitation year that includes the date they terminated. The following payments are included:
regular pay, overtime pay, bonuses, commissions, shift differentials, and similar compensation (i.e., payments that would have continued had emp...(register to read more)