FICA after EGTRRA

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Client maintains a final average pay defined benefit plan, and a nonqualified excess plan to make up for the limits imposed by 415 and 401(a)(17). Client has allowed the NQDCP participants to pay FICA tax on each year's vested accrual, per the 3121(v) regs which permit inclusion before the date the amount deferred is reasonably ascertainable.

Now client will adopt EGTRRA's $200,000 401(a)(17) limit retroactively per Notice 2001-56. This will result in significantly higher qualified plan accruals for certain participants, and a corresponding reduction in the nonqualified plan accruals. Therefore the FICA tax for years prior to 2002 would have been significantly overestimated.

The regs don't seem to permit an adjustment until the resolution date.

Has anyone addressed a similar situation? What about a "negative accrual" for 2002 to offset other income?

Thanks-

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