EGTRRA and off-calendar plan years

[Guest T-BONE]

Is it clear when the new EGTRRA limits/rules such as 415, 401(a)(17), and catch-up contributions will apply for off-calendar plan years? For example, plan year and limitation year is 12/31-12/30. Will the new 415 limit apply for the period 12/31/01-12/30/02 OR 12/31/02-12/30/03??

[stephen]

12/31/02 -12/30/03

The new rules apply for plan years beginning after 12/31/01.

[Guest T-BONE]

The effective dates for these provisions within the Act state "years beginning after Deceber 31, 2001" and in some cases "tax years beginning after December 31, 2001." It does not specify "plan year" so I'm not convinced that a plan with a plan year end 12/30 needs to wait until 12/31/2002 to implement EGTRRA provisions.

[Brenda Wren]

Check out thread on 7/27/01:

http://benefitslink.com/boards/index.php?showtopic=10923

By the way, I believe Corbel has since changed their position on this matter.

[Guest T-BONE]

Thank you for directing my to the 7/27 post. It sounds as if MGB has learned that the IRS intends to provide guidance stating that the new 415 limit will first apply to limitation years beginning after 12/31/2001. Would the same hold true for the 401(a)(17) limit?

Also, off-calendar year plans could have a very messy time implementing the catch-up contributions. Assume a 6/30 calendar year-end. Can a participant who attains age 50 before 6/30/02 contribute a catch-up contribution between 1/1/02 and 6/30/02? Does it depend on whether the catch-up is being made to exceed the 7/1/01-6/30/02 plan limit or the 2002 402(g) limit?