Gap period income

[John Feldt ERPA CPC QPA]

Did any guidance change the GAP period income issue for excess deferrals?

Under Final 1.402(g)-1 regulations for 1.402(g)-1 paragraph (e)(5)(i) and it states as follows:

(5) Income allocable to excess deferrals

(i) General rule. – The income allocable to excess deferrals for a taxable year that begins on or after January 1, 2007 is equal to the sum of the allocable gain or loss for the taxable year of the individual and, to the extent the excess deferrals are or will be credited with gain or loss for the period after the close of the taxable year and prior to the distribution (the gap period)

if the total account were to be distributed, the allocable gain or loss during the period. The income allocable to excess deferrals for a taxable year that begins before 2007 is determined using the 1.402(g)-1(e)(5) (as it appeared in the April 1, 2006 edition of 26 CFR Part 1)

- So it looks to me like gap period income will apply for excess deferrals beginning with 2007 tax years, but PPA said something related - that must have only applied to ADP/ACP refunds, not for excess (over the 402(g) limit) refunds?

[John Feldt ERPA CPC QPA]

I've not found any, so I'll say no.