Off Calendar Year Limits

[MBCarey]

I know this is probably something I should already know. But I just got 6 off calendar year plans. And I am just not sure what COLA limits to use. The plan year is 9/1/2007-8/31/2008. When looking ahead to the next plan year, would I tell the client that the maximums are the 2008 Max. or the 2009 Maximums.

[WDIK]

I believe that the 402(g) limit is tied to the participant's tax year, not the plan year.

[BG5150]

I believe the 415 limits are those in affect on the last day of the limitation year.

402(g) is the calendar year for rank and file--not 100% sure about owners.

Compensation limit is what is in effect on day 1 of the plan year.

Same with HCE & Key figures.

[Tom Poje]

the deferral limit is always calendar year. (That way, the govt can tell how much someone deferred if they worked for more than one company. One simply adds up the W-2s deferral amounts.)

all other limits are beginning of year values, except the 415 limit which is the end of the year.

Thus, you could take a calendar year plan 2008, shorten it by one day, and have it end 12/30/2008. your next plan year begins 12/31/2008 and ends 12/30/2009. You get to use $49,000 for the 415 limit.

back in 1993 the comp limit was 235,840. then they cut things back to 150,000 in 1994. so my understanding is that a number of plan went short plan year in 1993, so they could get an extra year of using 235,840 (comp is a beginning of year value)