Search the Community

A 401k plan is on a calendar year and ceases contributions in March. However, the effective date of the termination is in July. Which date is used to determine the prorated 415 limit? If the employer had already ceased contributions with the intention to terminate, but did not make the effective date until several months after, aren't they essentially increasing the contributions allowed by the prorated 415 limit? Any guidance is appreciated!

I have a sole prop DB plan where the benefit is limited by the 415 comp limit. The Comp limit is still being phase in over the 10 year period. Question: Can the 404 "Cushion Amount" include the increase in the 415 comp limit during the year?

In our FIS Corbel document under Maximum Annual Additions it provides in part that if an employer contribution that otherwise would cause annual additions to exceed maximum permissible amounts the contribution is reduced and any amount in excess of the maximum permissible amount that would have been allocated "may be allocated to other Participants". We have an employer with the only three participants who are all owners or related to owners (no other employees, all HCEs). Two out of three of the participants have maximized their 401(k) for the year. When we determine the 25% deductible employer contribution based on eligible compensation and we allocate based on plan formula these two participants will hit their 415 limit. Which then per plan document would be allocated to the other owner who did not defer. Any problems with allocating additional monies to this third participant once the first two participants have reached their 415 limit? I have been told that this is aggressive but I cannot find any guidance that says we cannot do this. Thanks in advance.

401(k) with cross-tested PS allocation puts both spouse HCEs in one allocation group. They choose 15% PS contribution, but doctor (husband) gets lower allocation because he is capped at 9.21% due to annual addition limitation. Can spouse (wife) still get 15% allocation? Or is she limited to the same percent as husband because they are in the same allocation group? Thanks!

A 50% owner of a company earned a benefit under the company's DB plan. Now she has started her own company of which she is the 100% owner and she would like to start a new DB plan. My reading of IRC Section 415(g) is that her benefits from both plans must be aggregated for 415 purposes. Is this correct? Thanks!