SEP / SH401k New Comp in same year

[Guest Suanne]

A client had a SARSEP plan, into which they deposited deferrals and employer contributions for part of the year. They then discontinued the SARSEP, and started a Safe Harbor 401(k) plan with a new comparability profit sharing allocation. They would like to make a profit sharing allocation for the year also. Are the contributions to the SARSEP plan considered in 401(a)(4) testing at all?

[Gary Lesser]

The SEP contributions are not considered in the 401(k) plan's testing. However, the SEP contributions are generally treated as contributed to a profit-sharing plan for deduction and Code Section 415 purposes. The plans are aggregated for elective limitation purposes (which are also individual limits - $15,500/20,500 for 2007). Hope this helps.