415 limits for short initial plan year.
Posted 11 October 1999 - 04:22 PM
Posted 11 October 1999 - 05:02 PM
Posted 11 October 1999 - 09:44 PM
Posted 12 October 1999 - 08:12 AM
The first year of the plan, the plan can provide for the limitation year to be the 12 month month period ending on the last day of the plan year (full 415 limits), or it could define the limiation year to coincide with the plan year, which would then prorate the 415 limits.
Posted 28 February 2001 - 07:09 PM
Posted 28 February 2001 - 08:52 PM
Posted 01 March 2001 - 08:31 AM
If the definition of compensation used for allocation purposes is less than 12 months, then the 401a17 is prorated. This would always be the case for a short plan year for the 401(k) part of the plan. If the 1st plan year is 6 months long, the plan could define compensation for the profit sharing contribution to be a 12 month period; in that case no pro-ration would occur for the profit sharing plan.
But for the 401(k) part of the plan, compensation for deferrals is only for the period that the plan is in effect. Therefore, for ADP/ACP testing you would pro-rate for short plan years.