Catch Up Contributions & 416

[Guest pensionpete]

In looking at the Catch-Up regulations, it states that "catch-up contributions with respect to the current year are not taken into account for purposes of section 416. However, catch-up contribution for prior years are taken into account".

If I'm doing the top heavy test for year 2005 for a CY 401k plan, I'm comparing account balances as of 12/31/04 (the determination date). So what catch-up contributions am I permitted to exclude from the test? What is the "current year" the regs are referring to?

[buckaroo]

I believe that when you are calculating the top heavy ratio for a year, all catch-up contributions are taken into account. So, if you are calculating TH status for 2005, you are using 12/31/2004 balances INCLDUING all catch-ups from 2004 and prior. The trick comes in determining whether a top heavy min is required in 2005. To clarify, if a key makes 401(k) contribs in 2005 and they are classified as catch-up conts, they will not trigger a T-H min. Check out the ERISA outline book under the definition of top heavy 2a7). It should help clarify.