Plan limit for HCE

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Can a maximum deferral percent for the highly compensated employees be imposed after the beginning of the year.

[Guest Midas]

Mid-year administrative caps are permitted. The maximum limit for the entire plan year will be a weighted average of the two (or more) deferral %s that were in effect during the plan year (i.e. 50% for 6 months, then 10% for 6 months = 30% for the plan year). If you want to allow catch-up eligible HCEs to be able to make a catch-up over and above the administrative cap (for the year that you make a change mid-year it would be over and above the weighted average %), you will need to incorporate language into your plan document that states what the administrative cap is (i.e. 10% for all HCEs). If it is not in the document, it is not considered a limit for catch-up purposes.