Short Plan Year

[Guest RJF]

I'm looking for comments on running a short year with the following:

Plan is TH. Plan has 3 classes - Owner lawyers, Non owner lawyers, all other

PY - 10/1/04 through 9/30/05. Short Year - 10/1/05 through 12/31/05

Plan is 401(K) with SHNEC(3%).

For Plan Year ending 9/30/05:

1 Owners contributions(comp. of 205,000) = 401(k) made in 2005 was 6k

SH was 6,150

PS was 20,275

1 Non-Owner(HCE) = SH = 3%

PS = 0

3 EE's = SH = 3%

PS = 1.3%

Passes gateway and 410(b) etc.

Q:

What is obligation for Short Year: SH notice was given.

Prorate comp at max of 52,500?

Allow owner to contribute 401(k) of $12,000(over 50)

Safe Harbor of 3% to Class 1, 2, and 3

The result is it gets the owner to 46K by 12/31/2005. Any suggestions or comments?

[Guest Ron Sevcik]

I believe that you also need to prorate the $42,000 = $10,500.

After 3% SH of $1,575 the max deferral left for owner is $8,925.