Retroactive Application Of EGTRRA Comp Limit

[Guest merlin]

If elected in the EGTRRA "good faith" amendment, the increased comp limit of $20000 could be applied retroactively. If so, does that mean that future indexed increases are retroactive as well? I've asked this question of three sources, and gotten a "yes", a "no", and "it's unclear". Anyone else want to weigh in? If the answer is "yes", do you still get the exexption from a4 testing on the increased benefit?

[david rigby]

Pardon the need for clarification: for 2004, the comp limit was indexed to $205K. Are your asking if that new limit can be used to apply to comp in years before 2004?

That is not the way I understand the law.

[GBurns]

Also, How can a future increase be retroactive?

[Blinky the 3-eyed Fish]

I agree with pax. EGTRRA didn't change the methodology with which 401(a)(17) increases apply to prior years except for the original $200,000 amount that could be applied retroactively.

[Guest merlin]

Thank you all. That's the answer I had expected. The non-negative responses I had been given earlier threw me.

[MGB]

The difference is that the $200,000 replaced the $150,000 that is written into the law. The $200,000 is not in relation to a particular year, it is the law, that is why it applied retroactively. The increases due to inflation each year since then (and in the future) are only with respect to the year that they are calculated for, they do not replace the law's reference to $200,000.

If the EGTRRA change had retained the reference to $150,000, and then went on to say that for years after X, the limit were $200,000, then it would not have been retroactive. However, that is not how it was structured...the $200,000 actually replaced the $150,000.