It was my understanding that in a fiscal year plan, the limits that apply for compensation and maximum annual addition are the limits for the calendar year in which the plan year began. A prospective client has a DC plan that has been using the limits for the calendar year in which the plan year ends. Is that permissible?
Full Version: plan limits for fiscal year plans
Using compensation for the calendar year ending in the plan year meets the requirement of 414(s).
QUOTE (PensionPro @ Sep 10 2009, 04:49 PM) 
Using compensation for the calendar year ending in the plan year meets the requirement of 414(s).
Does the same apply for the annual addition limit?
'limits' are based on plan year begining(e.g for comp, see 1.401(a)(17)-1(a)(3) - they even give an example to make things clear). the one exception is the 415 limit which is based on plan year end. see 1.415(d)-1(a)(3).
even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.
(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)
so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09
even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.
(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)
so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09
QUOTE (Tom Poje @ Sep 10 2009, 06:51 PM)
'limits' are based on plan year begining(e.g for comp, see 1.401(a)(17)-1(a)(3) - they even give an example to make things clear). the one exception is the 415 limit which is based on plan year end. see 1.415(d)-1(a)(3).
even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.
(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)
so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09
even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.
(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)
so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09
Thanks, Tom!
That's exactly what I needed.
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