Change in plan year.

[SMB]

Client currenlty operates both its business and its PS Plan on a 11/01-10/31 tax year/plan year. Wants to change plan year to calendar year effective 01/01/02 and add 401(k) provisios to take advantage of (1) new increased PS deduction and (2) non-inclusion of 40(k) contributions in the deduction limit.

Will obviously involve a short plan year 11/01/01-12/31/01.

The businsess is to remain on its original 11/01-10/31 fiscal tax year.

I am confused as to what contributions for what plan years will be deductible for which business tax years.

I would appreciate any comments, suggestions, recommendations, cautions, etc. from our more knowledgeable and experienced readers regarding this situation.

Thanks for any and all responses!

[wmyer]

I don't think this works. The change in the PS deduction limit to 25% is effective for TAX YEARS beginning on or after 1/1/2002.