415 Testing: Noncalendar plan years

[Guest m2b2]

Sorry for the second question...

For non-calendar year plans it is the the limit in effect at the end of the limitation year that should be used.

This is confusing to me as I always thought 415 was a calendar year limitation.

Does this mean:

A) That 415 tests should be run on a plan year basis? or

B) 415 tests should still be run on a calendar year basis however, using the limitiation in which the plan year ends?

Thanks again for your help!

[Belgarath]

Right, it is for limitation years ending in the calendar year. So a DC plan with a 7-1-06 to 6-30-07 limitation year would have a 415 limit of $45,000.

[Guest m2b2]

Right, it is for limitation years ending in the calendar year. So a DC plan with a 7-1-06 to 6-30-07 limitation year would have a 415 limit of $45,000.

Thanks for the responce.

Just to clafiry you are saying that the 415 test for a plan year 7-1-06 to 6-30-07 should be run

01/01/2006 - 12/31/2006 with a limitation of $45,000.

or

07/01/2006 - 06/30/2007 with a limitation of $45,000.

[Belgarath]

The latter option.

[austin3515]

I'm not sure of the site, but I'm almost certain you could elect to have the limitation year be the calendar year. This is especially common when the employer has two plans, both with different year-ends. For 415 limits, you need to pick one because the test is at the employer level. But even without two plans, I still think you pick a limitation year that doesn't match the Plan Year.

[Guest m2b2]

Thank you both.

Austin you hit close to home on this one. The reason this question sprouted is that I noticed a special provision in an off calendar plan which stated "No participant shall have an annual addition to the participant's account for any calendar year in excess of the amount then permitted under section 415 of the law"

My question to "legal" was should I run the test both ways (calendar and off-calendar). I was then told 415 should always be run on a calendar year(Never on a noncal basis). Which I knew was incorrect.

Thanks again!

[BG5150]

Maybe someone confused 415 and 402(g).

And what does the plan docs say the limitation year is?