415 limits and Collective Bargaining

[Guest Rutager]

Employer has collectively and non-collectively bargained employees in one 401(k) plan.

Company plan and corporate year is 12-31.

The plan contains a safe harbor non-elective contribuiton and new comp profit sharing provision.

The ER made a large employer contribuiton for the 2005 plan year - but did not make it until December 20, 2006 - well after the 415 deadline limit to count it as a 2005 annual addition.

Their CPA wants to know what they can contribute for 2006.

One HCE who is collectively bargained got a $28,000 2005 ER contribution on 12-20-2006 for the 2005 plan year. He then put in $15,000 in the 401(k) in 2006 - therefore, from what I've read in the ERISA outline book, he is already up to $43,000 for 2006 - $28,000 from 2005 plan year which counts as 2006 annual addition and $15,000 2006 401(k).

He is still owed a 3% SHNE for 2006 - which has not been made as of yet. I think he gets his 3% SHNE and then is going to end up getting a refund of a portion of his 401(k) for 2006 becuase he is going to be over the 415 limit of $44,000 - all due to the timing of the 2005 contribuiton not made until December 20, 2006.

My question - is my logic correct? Are there any special rules for collectively bargained employees within the 415 provisions? I have read most of chapter 5 of the ERISA outline book regarding 415 limits and don't see specifics on collectively bargained employees - therefore I assume there are no special rules for the CBA employees.

Thanks for any response.

[Jim Chad]

FWIW I think you may be right. It depends on when they put in the SHNEC and when their tax return is due counting extensions. They may want to put this in more than 30 days after the due date so it can count as an 07 annual addition.