415 excess

[fiona1]

I was wondering if any one else has dealt with this situation this year....

A participant has the following amounts in the 2007 limitation year:

$33,750.00 Employer Other

$15,500.00 Elective Deferral

$11,151.18 Employee Contributions

$60,401.18 Total contributions

This results in a $15,401.18 415 limit excess. The plan says to first refund Employee Contributions. If there is still an excess, then to refund from Elective Deferral.

This was the first year the member was in the plan and during 2007 there was a net loss in her account.

So, my first question is should we apply any of the net loss to the amount or do we still have to refund the entire $15,401.18?

Now, in 2008 the account has had more net loss. As of today, the value of the Employee Contributions is $9,851.67.

So, my second question is should we just be refunding $9,851.67 from the Employee Contributions and the remaining 5,549.51 from elective deferrals? That means the member is losing $1,299.51 of their after tax contribution.

Thoughts?

[Mike Preston]

All returns include gains/losses. Does that solve your problem?