One Day Short Plan Year ADP Test - 401(a) 17 Limit

[Guest wwc870]

I have a client that has amended their 12-30 plan year end to reflect 12-31. In running a short plan year ADP/ACP test (12-31 to 12-31) I was hoping someone could provide some guidance as to how I would pro-rate the 401(a)(17) limit? Do I round up and pro-rate for a using a whole month? Thanks for any guidance provided!

[jquazza]

Do you even have any contributions and/or compensation during that period? If you don't, you don't really have an issue, if you do (i.e. 12/31 was a payroll date), it would seem reasonable to prorate the limits you use in your tests to the payroll period covered (i.e. monthly: 1/12, biweekly: 1/26.) The 401(a)(17) regs actually mention the proration to the number of months in the plan year, but your case is so extreme (a 1-day plan year) that you may have a hard time justifying that 1 day = 1 month.