Final 401(k) Regs. and Gap Earnings

[Guest M. Martin]

The final 401(k) regulations are pretty clear but I wanted to ensure that we were calculating earnings correctly for refunds attributed to the 2005 year. Our document (Corbel) indicates that for 402g refunds gap earnings are not required and for ADP/ACP refunds gap earnings are optional.

In reading the final regs. it appears that gap earnings for 402g refunds will not be required unless the document mandates it.

For ADP/ACP refunds attributed to the 2005 plan year gap earnings are still optional but for plan years beginning in 2006 & refunds processed in 2007 gap earnings will be required.

Correct on both items?

Thank you!

[JDuns]

Proposed regs issued 1-26 (page 4324 of Federal Register) indicate that the gap period income must be included for 402(g) just as it is for ADP/ACP.

[Bird]

For ADP/ACP refunds attributed to the 2005 plan year gap earnings are still optional but for plan years beginning in 2006 & refunds processed in 2007 gap earnings will be required.

What about this question? I thought we had to calculate gap earnings starting with refunds processed in 2006...

[Bird]

OK, I found at least one source that says we start in 2007...I guess I need to get out more (or less).

[Archimage]

I agree with your assessment.