MATCH FOR PARTNERS IN 401(K)

[Ervin Barham]

For plan years after 1997, self-employed's matching is not subject to the deferral limit of $10,000. Thus, a proprietor or partner can defer 10k and receive a match. (Taxpayer Relief Act of 1997)

Your plan may have to be amended.

I have not seen the PAB, so it's hard for me to believe they goofed that big, but there was a change.

[Guest PAM]

Have there been any recent changes in the treatment of match for partners? My 1999 Pension Answer Book still says that match is considered a deferral for partners.

[Chester]

Section 1501 of the Taxpayer Relief Act specifically provides that matching contributions for self-employed individuals(as defined in Section 401©) shall not be treated as an elective contribution for a

401(k) plan. This also means that you would not treat the match as a deferral for the ADP/ACP tests as well as the 402(g) limit.

This change is effective for years beginning after 12/31/97.