Plan Termination prorates section 415 limits?

[Guest Lawrence_Groves]

A 401(k) plan terminates by resolution on January 31, 2004. Are the compensation limits of $205,000 and the deferral limits of $13,000 for the full year prorated to just one month? Or, in other words, does a resolution to terminate the plan create a short limitation year? Section 1.415-2(b)(4) indicates that if you have an ongoing plan and changed limitation years, the limits would be prorated?

[Guest Lawrenceg]

If,when you terminate a plan, you also do not amend to a short limitation year then you use the full plan year as the limitation year and the 402(g) limit is an individual annual limit.

If you do amend to a short limitation year, then the 417 compensation and 415 contribution limits are prorated.

[Guest Blbvip]

The final 415 Regulations state if a "plan termination is effective as of a date other than the last day of the plan's limitation year, the plan is deemed to have been amended to change its limitation year." Therefore, pro-ration is required for the 415©(1)(A) dollar. As stated the 402(g) limit is an employee limit.

[FormsRstillmylife]

But the Final 415 Regulations are not effective yet. Without this deeming regulation in effect, the plan could either define limitation year separate from the plan year or could have amended the plan to preserve a 12-month limitation year. Or, do you think the IRS has some prior guidance to point to in support of the position it took in the final regulation?