Catch-Up Contributions and the General Test

[Guest mingblue]

Are 401(k) catch-up contributions considered along with deferrals, match, & profit sharing allocations when aggregating with a DB for the General Test ?

[Effen]

no - they are complete "free-bees"

[Guest Sieve]

Catch-up contributions allocated in the current year are not taken into account, but catch-up contributions made for prior years are taken into account if prior years' allocations are considered when performing the general test. (Treas. Reg. Section 1.414(v)-1(d)(3)(ii).) Also, catch-up contributions are taken into account in determining if a plan is top heavy. So, they're not entirely free.

[Guest mingblue]

thanks for the info Effen and Sieve - another couple of questions - in the very first paragragh of the 1.414(v)-1 reg. it states that catch-ups are elective deferrals that exceed the applicable limits ( as long as they don't exceed their own limit, currently $5000) and in Example 6(ii) of the reg. it states "once participant E's elective deferrals for the calendar year 2006 exceed $15,000, subsequent elective deferrals are treated as catch-up contributions ................"

Taken alone these excerpts suggest to me that an elective deferral is classified as a catch-up once the 402(g)(1)(B) is reached - however, we have differing opinions within our department here - some say that the 402(g)(1)(B) need not be reached in order to count a deferral as a catch-up - for example, you could have only a $4000 deferral and another $5000 catch-up on top of that.

There is also an internal debate as to whether or not you need any deferrals to have a catch-up - e.g. could you have $0 deferrals and $5000 catch-up ?

Would appreciate your insights again .

[Guest Sieve]

Must exceed some limit to be a catch-up--either 402(g) or ADP (i.e., failed ADP test) or plan-imposed limit. No reason that a plan couldn't impose a 0% limit (for all, or only for HCEs), so that entire contribution for those people would be a catch-up.

[John Feldt ERPA CPC QPA]

Or the 415 limit.