StevenM

Yes you can! As soon as you point to something official in writing that we can show the Auditor or Plan Sponsor or anyone else that disagrees with us. At the moment I have no choice but to abide by the Plan Sponsor's interpretation of how the Annual Comp Limit should be applied because I'm unable to prove that she's incorrect in her assumptions.

In my situation the Plan doesn't allow Dollar Elections. Whole Percentage Elections only.

We're familiar with that information and in the example Mary is deferring on a fixed dollar amount which is almost the exact amount she needs to defer each month in order to reach the maximum contribution limit for 2014, The problem that I have is that an employee has requested to defer on a percentage of his compensation. However, the Plan Sponsor insists that he should not defer that specific percentage of his true compensation but that he should defer that percentage of the 401(a)(17) limit divided by the number of pay periods in the year because he's estimated to earn more than the 401(a)(17) limit. Does that make sense? The answer to your Match question can be yes or no. It depends on what the employee is deferring. Is he receiving the Match cap each payroll? Basically the Match he receives can't exceed the Match formula when applied to $265,000 Annual Contribution Limit. If he's under that for the year through payroll he is still eligible to receive more regardless of his true YTD compensation (assuming there is no first $265,000 specification in the Plan Doc).

We're familiar with that information and in the example Mary is deferring on a fixed dollar amount which is almost the exact amount she needs to defer each month in order to reach the maximum contribution limit for 2014, The problem that I have is that an employee has requested to defer on a percentage of his compensation. However, the Plan Sponsor insists that he should not defer that specific percentage of his true compensation but that he should defer that percentage of the 401(a)(17) limit divided by the number of pay periods in the year because he's estimated to earn more than the 401(a)(17) limit. Does that make sense?

What if the employee terminates mid year and doesn't fully reach the 401(a)(17) limit? Wouldn't they have deferred a lesser percentage than they specifically elected because the Plan Sponsor or Payroll company assumed they would exceed the Annual Comp Limit?

I have a client that believes she should limit the Per Payroll Deferral Calculations to the Annual Compensation Limit divided by the number of Payrolls in the year for employees that have a base salary that is greater than the Annual Compensation Limit. The Plan allows employees to continue to defer on money after they've reached the Annual Comp Limit. I'm looking specifically for documentation to prove that she's incorrect in her interpretation of how the Annual Comp Limit works but I'm having difficulty finding anything and she's refusing to budge. Example: Employee Earns $360,000 Annually and has elected 5% Pre-Tax. EE is paid $13,846.15 on a Bi-Weekly basis. Payroll calculates a Pre-Tax Deferral of $692.31. Plan Sponsor says this is incorrect. States that since the EE earns > than $265,000 the Bi-Weekly Pre-Tax Deferral should be $509.62 = ($265,000 / 26) * .05. Thank you,