If catch-up is being used in a 401(k) PS plan, is the maximum $42,000 increased by the amount of the catch up?

[Guest stephentaft]

401(K) with profit sharing contribution. If catch up is being used is the maximum $42,000 increased by the amount of the catch up?

Thanks.

Steve

[JanetM]

No, catch ups are not included when calculating annual addition. Only those deferrals under 402g are counted.

[WDIK]

Or to put it another way:

Yes, we have no bananas.

[Guest ERIC STRAND]

I'm not sure I understood either response to question. I think the answer is, "yes", the $42,000 amount is increased. 402g & ADP catch-up don't count towards 415 limit. The sum of catch-up plus other annual additions for 2005 may exceed $42,000 limit. Deferrals may also be treated as 415 catch-up, if needed.

[No Name]

Only deferrals in excess of 402g are catch-ups, in my understanding. So deferrals over $14,000 in 2005 could possibly be catch-ups.

Yes, 415 would disregard up to $4,000 (2005) of deferrals in excess of $14,000.

[TBob]

Only deferrals in excess of 402g are catch-ups...

I disagree or did not understand your choice of words. As soon as the participants contributions hit any limit, deferrals can be classified as catch-ups. Those limits include 402(g), 415, or can be limited by the outcome of the ADP test.

As an example...in 2005 a participant can defer $4000, receive a $42000 profit sharing contribution and classify the entire deferral as catchup.

or am I missing something?

I am not sure where the banannas came from but they don't taste very good with catchup.

[Leopurrd]

Tbob, I agree with you -there are 3 limits to take into account for catch-up purposes.

[Blinky the 3-eyed Fish]

4 - plan limit too