Tracking 402(g) limit in an off calendar year

[Guest nmyers]

The question came up today in our office, on how to track the 402(g) limit as well as the 415 limit in an off calendar plan. We currently have a client who has a plan year of October 1 to September 30.

What I've done with other employers, is track the limits during the plan year, not a calendar year. Both the 415 & 402(g) should be tracked based on the limitation year which is in this case the same as the plan year. My current employer feels that that the 402(g) limit is only a calendar year event, and wonders how would those limits be treated if the participant still has 3 months left in a calendar year to contribute.

Can anyone shed some light on this for us? How should the 402(g)limit and 415 limit be tracked in an Off-calendar year?

[austin3515]

I edited my post, as I now realize it was your prior employer that made the mistake, and not your current employer.

You're current employer is on the money - your prior employer needs some training--this is a very basic question!!

Nothing about 402(g) or the corresponding 401(a)(X) is based on a Plan Year. It is a calendar year limit no matter what the Plan year is. 415 on the other hand can go either way, depending on what the employer elects. However, it is almost always the Plan Year.

[Tom Poje]

to make the logic even easier:

the govt looks at all the W-2s an individual has in a given year to determine if the 402(g) has been exceeded.

it is that easy. you should or could do the same.

thus an ee could defer 15,000 in Dec 2006 and 15,500 in Jan 2007 - a total of 30,500 for a non calendar plan year and still be okay for the 402g limit (assuming no other deferrals were made - to this plan OR any other plans with any other employers [except for possible catch-ups)