Deferrals on Compensation above 401(a)(17) limit

[James Matt Ullakko]

Quoting a prior reply from previous post about a month ago:

"Years ago the IRS took the position that allowing 401k deferrals to continue after the 401(a)(17) compensation limit had been reached was in effect recognizing compensation above the comp limit and thus disallowed. This contradicts the conclusion I am reading on the replies here, does anyone have a site or other reference to support the allowance of 401k deferrals after the comp limit has been reached?"

As I understood the original question - seemed to be asking about very low deferral election in place throughout year - maximum deferrals reached before 402(g) limit exhausted because individual hit the compensation limit. Could this individual continue to make deferrals on compensation earned for remainder of year, even though that compensation is above the limit imposed by 401(a)(17)?

It would appear any subsequent deferrals for the remainder of the year are being made on compensation earned above the comp limit, unless it could be argued that the deferrals made thus far were not consistent with what the intended deferral election was to begin with...

Any comments?

[rcline46]

Matt, this must have been discussed 50 times since you became a member. Do a search on the many threads covering this issue.