davef Posted June 21, 2001 Posted June 21, 2001 Has anyone given any thoughts as to how the new 402(g) deferral limits should be communicated to participants in non-calendar year 401(k) plans? For example, if an employer has a 401(k) plan with a PY starting 7/1/01, will they be notifying participants toward the end of 2001 that the higher $11,000 limit (and possible catch-up contribution) will be applicable for CY 2002, so that they can change their current deferral election at the start of 2002? While this may seem to be in the best interest of the participants, it could end up resulting in more ADP refunds for the 2001 PY. Any thoughts?
Bob R Posted June 22, 2001 Posted June 22, 2001 I haven't seen any comments on this. I think many people think that since it's generally HCEs who put in the maximum, that no communication will be made. I do know that the IRS is considering whether it should issue an explanation of the tax credit for elective contributions. Many employers may be reluctant to provide anything that gets close to tax advice and that's why the IRS is looking into this. And, getting the word out on the tax credit will help increase participation of NHCEs.
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