Catch-Up Limits in Off-Calendar Year Plans

[Guest thooge]

The plan year falls between 8/1/03 - 7/31/04. The plan has failed the ADP test and an HCE that is eligible for catch-up contributions.

Assuming no catch-up will be used for the 2004 plan year, and no 402(g) limits have been exceeded in any calendar year. Can the 2003 & 2004 calendar year limits ($2000 & $3000 respectively) be combined for the 2003 plan year ADP test? Assume the test fails and the HCE's refund should be $5,000. If these two limits are combined for this plan year, the HCE could apply all of this to the refund.

[jquazza]

No, you cannot do that. Take a look at treas. reag. 1.414(v)-1(b)(3) and -1(d)(2). The excess elective deferrals count against the catch up limit for the calendar year in which the plan year ends. It is assuming as you said in your post that 402(g) is not an issue.

Nice try but no cigar...

[Guest PAL100759]

I agree! I've got a plan year ending 9/30 and did extensive research on this. Our participants may only contribute CUC from 10/1 - 12/31 if it is in excess of a legal limit because only those contributions are treated as CUC immediately upon deferral. Otherwise, they are treated as CUC as of the last day of the plan year.

PAL