Off Calendar Year Catch Up Contributions

[MBCarey]

I know this has been discussed before and I have read the posts, but I am still not clear.

I have a plan with a plan year beginning 10/1/2001 and ending 9/30/2002. Would catch-up contributions of 1,000 be allowed for the period 1/1/02-9/30/02 or would the contributions be for plan year 10/01/02-9/30/03.

And if they are allowed for 1/1/02 to 9/30/02. When would the plan have needed to be amended.

[Brian Gallagher]

the catch ups are for the calendar year in which the person turns (or is) 50. the 402g limit is not-withstanding plan year.

[Guest carsca]

So, should the Plan have been amended by 9/30/2002?

[Brian Gallagher]

is the plan a prototype or an idp? the dates of the remedial amendment period are different. i'm not sure exactly what they are (or were), another group at my firm is taking care of restating all the docs.

[Guest carsca]

Say its a IDP.

[Brian Gallagher]

honestly, i'm not sure. i'll have to defer to the many people here who know more about this stuff than me. sorry.

[kocak]

Think about effective opportunity. If the participants didn't know catch-up was available for the pYE 9/30/02, even if you were somehow able to amend your plan, I would argue that catch-ups were not available.

[Tom Poje]

Kocak:

it does not matter whether someone is aware that catch ups are available - as long as the document allows them.

suppose my ADP test fails. if the plan allows catch-ups, you don't have to refund

or if someone inadvertantly deferred too much, same deal.

catch ups are for situations in which someone goes over a plan imposed limit.

I think most people think that catch ups are 'specifically and intentionally' chosen by a participant. this is not necessarily the case.

[kocak]

Thanks Tom, I'll have to go back and reread the info. I thought there was an effective opportunity issue as well as a universal availability issue. It doesn't seem right that the HCEs can take advantage of something (by avoiding returns) but the NHCEs can not because they weren't aware they could defer more than a plan limit or the 402(g) limit.

[Tom Poje]

I would say the catch is that employees should have been given the SPD or SMM indicating the availability of catch ups.

so legitimately, if only HCEs knew about it, you could say under BRF the while catch ups were currently available, they weren't effectively available. proving it would be a whole other ball of wax.

But you have a legitimate concern.

(In some ways, it would be like having a safe harbor 401k. You automatically pass testing, so the IRS said you have to provide notification just so people know)