415 Comp vs. Comp used to determine contribution

[Guest Hartnett123]

Is 415 compensation the 415 compensation earned for the *whole year,* or is it reduced to the *eligibility period comp.*

In other words, if you have a plan where participants enter on 7/1, and you calculation their contribution based on compensation earned during the second half of the year, is a participant's *415* compensation also just the compensation earned during the second half of the year . . .

[Tom Poje]

for what purpose?

If top-heavy, entry date doesn't matter, it is entire year.

gateway minimum is also 415 comp, but can be limited to date of entry!

[QDROphile]

Why does it matter in a 401(k) plan? Is the contribution from mid year on really in excess of the compensation from mid year on?

[Guest Hartnett123]

I ask because we are converting from Quantech to Datair.

When entering census data, Datair asks for quite a number of "compensations." I don't yet know which compensation the Datair system uses for which calculations, and I just don't want to waste a bunch of time. Conversions are a pain as it is.

So my question is general . . . it applies to DC plans in general . . . if, for purposes of calculating the contribution, you only use compensation earned during the eligibility period, then does your plan's definition of 415 compensation also use the eligibility period compensation?

I ask because the plan document doesn't specify . . . and again, I don't want to waste time.

Thanks.

[Tom Poje]

well, again it depends.

max deductibilty (25% of eligible pay) is based on total, not date of entry comp.

so again, it depends on what you might need.

[Guest Hartnett123]

I guess I'd better call Datair to see just what their system uses that particular "box" for.

[jaemmons]

IRC 415 compensation does not exclude comp prior to participation. Therefore, if your document uses only the comp paid while a participant for allocation purposes, you need to request full year compensation.