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402(g) Limit

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3 replies to this topic

#1 cconnell


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Posted 07 December 2005 - 01:48 PM

I have a question regarding the 402(g) limits when it comes to failing the ADP test.

I have a plan year end of 06/30/05. A participant deferrerd $13,464 during that plan year. I know the limit for 402(g) is 13,000 for 2004. He is not eligible for catch up so the limit for ADP is 13,000. Since this is a fiscal year end and he is over the 402(g) limit, can the excess deferral be carried to the next plan year without returning that excess to the particpant?

In other words, since the extra $464 is already in the investment account, can a note be made to limit the deferrals for the next plan year so he does not exceed the limits for the next plan year?

Everything I see address a calander year. In whole, the adp test passed, he just exceed the 402(g) limit.

Any information would be helpful.

Thank You,


#2 Belgarath


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Posted 07 December 2005 - 02:00 PM

I don't know what button I hit a minute ago - but somehow it quoted everything with no reply. Anyway...

I can't tell from your post, but you may not have exceeded the 402(g) limit. This limit is based upon a calendar year, not on plan year. So if some was deferred in 2004 and some in 2005, then you may still be fine.

It can get tricky coordinating these limits, particularly when plan, fiscal, and calendar years are different!

#3 Tom Poje

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Posted 07 December 2005 - 02:37 PM

in other words: look at ees w-2 in 2004. if deferrals are less than 13,000 you are ok.
if ee worked somewhere else it is sum of all deferrals.
you wont know 2005 w-2 until the end of the month.
Humbug, back for a month.
(yes, that is really me)

#4 E as in ERISA

E as in ERISA

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Posted 07 December 2005 - 04:34 PM

I agree with them. Example. If he contributed $7,000 from 7/1/04 - 12/31/04 and $6,464 from 1/1/05 - 6/30/05, then you have no 402(g) problem. If he contributed all $13,464 from 7/1/04-12/31/04, then you have a 402(g) excess for 2004. If you leave in the plan, you will potentially have double taxation. Taxed for the 2004 excess, then again when distributed.