401(k) new plan

[pbarrett]

We have a client who has had a ps plan with us for years. Effective 11/01/02 he added a 401(k) feature. The owner would like to know how much he can defer (estimate only) for the 2002 year. The document states compensation is for the entire year. Here are my basic question:

1.) Can I use the new rule that allows you to assume the non-highlys contributed 3% since this isn't really a new plan?

Thanks for any input.

[2muchstress]

IRS Notice 98-1 indicates that a first plan year is considered to be the first year in which a plan allows for 401(k) contributions unless the plan was aggregated with another plan that allowed for 401(k) contributions in the prior year.