Can total allocations actually exceed comp. for over 50's?

[R. Butler]

I should know this, but....

Safe Harbor 401(k) plan with cross-testing provision . Over 50 participant earns $18,000, defers $16,000, shnec is $540. Assuming gateway is met & nondiscrim. testing passes can participant get a profit sharing allocation of $4,460, bringing total allocations to $21,000? I don't see why not but it seems to good to be true.

[FundeK]

I would have to agree with you. The participant has exceeded the 402(g) limit so $3,000 of the deferrals would be classified as catch-up contribution. Participant's 415 limit is 100% of compensation ($18,000) so he could receive the $13,000 deferral + $540 shnec + $4,460 PS contribution = $18,000.

Same logic would apply if the participant deferred $12,000 was matched $6,000. He would hit the 415 limit first. He could then defer an additional $3,000 to be classified as catch-up contribution.

[chris]

Appears correct since catch-up's are not subject to 415 limit.

[R. Butler]

Thanks, I was pretty sure of that, but again it seemed to good to be true, so I just wanted to verify.

[FundeK]

One more item to mention. If the participant's compensation was $10,000 he could not defer more than the $10,000. He can not defer more than his compensation.

Example, Participant defers $7,000, matched $3,000. He hit his 415 limit so he could defer an additional $3,000 to be classified as catch-up.

Example, Participant defers $10,000, no company contribution. He can not defer any additional funds to be classified as catch-up because he would exceed his compensation.