plan limits for fiscal year plans

[M Norton]

It was my understanding that in a fiscal year plan, the limits that apply for compensation and maximum annual addition are the limits for the calendar year in which the plan year began. A prospective client has a DC plan that has been using the limits for the calendar year in which the plan year ends. Is that permissible?

[PensionPro]

Using compensation for the calendar year ending in the plan year meets the requirement of 414(s).

[M Norton]

Using compensation for the calendar year ending in the plan year meets the requirement of 414(s).

Does the same apply for the annual addition limit?

[Tom Poje]

'limits' are based on plan year begining(e.g for comp, see 1.401(a)(17)-1(a)(3) - they even give an example to make things clear). the one exception is the 415 limit which is based on plan year end. see 1.415(d)-1(a)(3).

even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.

(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)

so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09

[M Norton]

'limits' are based on plan year begining(e.g for comp, see 1.401(a)(17)-1(a)(3) - they even give an example to make things clear). the one exception is the 415 limit which is based on plan year end. see 1.415(d)-1(a)(3).

even the 415 limit has an odd reuqirement, in that you can't reach that limit until the actual calendar year starts.

(1.415(d)-1(b)(2)(iii) (or at least that is how I would read it)

so for a profit sharing plan year 7/1/08 - 6/30/09 you could not 'prefund' someone at 49,000 until 1/1/09

Thanks, Tom!

That's exactly what I needed.