402(g) and Catch Up

[justatester]

Question:

An Employee works for Company A and contributes $10,500. He leaves that company and goes to work for an unrelated employer (Co. B) and contributes another $10,000. Would the entrie $10,000 contributed at Co. B be considered regular deferrals or would $5000 be considered regular deferrals and $5000 be considered catch up.

Your thoughts would be greatly appreciated!

[BG5150]

For plan purposes or the person's purposes?

[justatester]

For plan purposes.

[Tom Poje]

aside from possibly some special language in one document or the other,

402(g)(2)(A) says "the individual may allocate the amount of excess deferrals among the plans...and notify each such plan of the portion allocated to it"

so if Plan A fails adp testing, then I would allocate it there!

..........................

in a really strange concept, suppose somehow the individual was an HCE for both companies, and both plans failed testing. based on what I have seen in the regs, the catch up limit is a plan imposed limit. thus, it appears an individual could have more than $5000 in catch up between two plans of unrelated employers! In fact, the IRS added language to say if one employer has 2 plans you have to aggregate those plans and cap the catch up at the limit to prevent this, but there is not similar language for unrelated employers.