Leaderboard

Yet another example of why deferrals should never be done by check. These clients kill me.

with the release of the consumer price index last Friday, (based on the current hi 3 average [ feb-mar-apr]) the limits just jumped to the next level 19,000 deferral 280,000 comp 56,000 415 limit of course there are 5 months to go, but I don't see any major drop coming in the index....

I still don't see it. Let's simplify the hypothetical: A taxpayer is an HCE in two unrelated companies. He defers exactly $12K in each plan. After each plan completes their respective ADP test, this HCE's $6,000 in excess employee contributions (in each plan) are reclassified as catchup. I think: For each plan, the HCE remains within that plan's limit. Overall, the participant remains at the individual 402(g) limit for a single taxpayer. You're saying that because catchup is limited to $6,000, his legal catchup limit is $6,000; and completely ignores that fact that he has a 402(g) limit of $24,000 that isn't exceeded. I don't agree with that. I don't believe a plan of one employer can dictate to another plan what is a catchup. When it comes to the statutory limit ($18,000 plus $6,000), this is the only time the plans (of two totally unrelated employers) should be combined for this determination. Good Luck!

yes, it is sometimes referred to as ethics. and the actual quote is

From my perspective, the current pension valuation tools solve all of the problems that Mike addressed. The client who does not understand present value math will find the CB plan much more to his liking, while the convert from public plan employment will understand the traditional DB formulas more easily, unless they offer lump sum benefits. I find the 417(e) rules definitely favor CB.