I provided an update on a previous post that got overlooked in responses, so I wanted to pull it into a new thread for responses.
I've been given a job offer by my current employer and have a question recently for which I'd appreciate some input.
The company is an early-stage, privately-held software company (roughly 30 employees) that recently finalized a Series A round and is headquartered outside of the USA. I've been working with the company in a couple of different capacities for two years already and this offer is a promotion to a VP role. For various reasons, the offer comes with a healthy five-figure starting bonus.
When I spoke with the CEO most recently, I was advised that the starting bonus for me is set aside and scheduled to be paid out - in some manner - this quarter. I asked whether the company is amenable to paying it as a profit-sharing 401(k) contribution. Yes, that would be an option.
I trust the folks at the top of the company to come through on our agreement, but I don't necessarily trust us to get things done quickly. (Things can easily turn out to be more complicated than we'd expected, and before we know it the next month has arrived... this would be why we finally got the 401(k) turned on in November.)
So am I missing anything if I suggest taking my starting bonus as a profit-sharing contribution to my 401(k)?
- I'm paid enough to be an HCE, but - as I understand the rules - I'm not treated as such for ACP/ADP testing in 2019 because I wasn't technically an employee of the company for the full year (I was employed by an overseas branch of the company for more than half of 2019). If anybody wants to disagree with my understanding of the HCE rules I'd be grateful to hear, because I'm a little fuzzy about the nuances of the HCE definitions.
- Our 401(k) is set up to allow profit-sharing contributions.
- Our 401(k) is set up to use "new comparability" for profit-sharing contributions.
- Our 401(k) is set up with no vesting period for employer contributions.
- A profit-sharing 401(k) contribution wouldn't be subject to FICA taxes so I could negotiate for those too.
Any thoughts, opinions, questions, or warnings?