Administrative Limit

[Earl]

A plan fails ADP in year 1. There is one HCE making $115k that defers the max and upsets the apple cart.

For year 2 I want to have the plan adopt an administrative limit on HCEs.

What would be the deadline to adopt?

Can't find anything except Sal seems to say it can be during the year in talking about something else (catch up availabiltiy)

I think it would have to be before the person defers in excess of what will be the limit for the year - otherwise it is a cutback.

Sound right?

[Tom Poje]

the catch-up rules anticipates the possibility of an imposed deferral limit being changed

1.414(v)-1(b)(2)(i)(A) Sum of $ amounts of the limits for the payroll period.

1.414(v)-1(b)(2)(i)(B) weighted average

thus, if you read through the example given in B, it sounds like you could indeed create a scenario in which an individual exceeds the limit because you all of a sudden put a cap on how much is deferred.

if that individual is not catch up eligible then you could indeed have an unhappy individual who needs a correction due to a plan imposed limit. not sure if that is a good strategy.