Contirbution Limits-Fiscal v Calendar year

[Guest rmse46]

I have a client with plan year 10/1/06 to 9/30/06 and wants to max out profit sharing contribution. The TPA tells me that we are limited to 2005 max contribtion of $42K as opposed to 2006 max contribution of $44K.

Please advise? If 44K is ok, how do I prove to TPA?

Thanks

[Belgarath]

I'm hesitant to opine without full information on the plan and limitation year, and whether this is really about 415 limits or is it about deductions.

Assuming you are just talking about 415 limits, and assuming that you really meant the plan year begins 10-1-05 (and not 10-1-06), and assuming the limitation year is the same as the plan year (and therefore ends in calendar year 2006) then yes, the 44,000 is ok. You could refer the TPA to 1.415-6(a)(2), and proposed reg 1.415(d)-1(b)(2)(iii).

I would ask the TPA to give you a detailed explanation, with references to the the IRC and the plan document where appropriate. The TPA may be correct depending upon the situation.

[Guest rmse46]

Your assumptions are correct. Thanks for such a prompt response.

Rick