Multiple Limitation Years - Application of 415 limit

[richard]

A company has a 401(k) plan on a 2/1-1/31 plan year (2/1-1/31 limitation year also).

They amend the plan effective 1/1/99 to a calendar year (with a calendar limitation year), thus creating an eleven-month plan year (2/1/98 to 12/31/98) with an eleven-month limitation year.

Meanwhile, they start a profit sharing plan effective 1/1/98, with a calendar plan year and a calendar limitation year.

Starting in 1999, life is simple, since the limitation years are both the calendar year. However, for 1998, what is the maximum 415 contribution for the owner, based on the following?

1998 pay (full year) = $100,000

1998 pay (from 2/1/98 to 12/31/98) = $91,666

1998 401(k) deferral = $10,000 for the calendar year.

(Don't worry about the 15% of payroll aggregate limit; there are enough other employees around.)

If we were simply on a calendar year, the limit would be 25% of $100,000, or $25,000; and the maximum allocation to the profit for him would be $15,000.

But, we have an eleven-month limitation year for the 401(k) plan -- 2/1/98 to 12/31/98.

The regulations discuss the 415 limit for a short limitation year at 1.415-2(B)(4)(iii) with an example at 1.415-2(B)(4)(iv). In this case, the 415 limit is prorated downward, and the pay used is the pay during the short limitation year.

However, the regulations are vague when an employee is covered by 2 DC plans with different limitation years; with the only reference that I could find at 1.415--2(B)(3): "Election of multiple limitation years. Any employer that maintains more than one qualified plan may elect to use different limnitation years for each such plan in accordance with rules determined by the Commissioner." I could find no further guidance.

Is his 415 limit equal to 25% of $100,000, 25% of $91,667, 25% of something else?

Any ideas?