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415 Limits - 403bs, who is responsible?

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From researching the 415 rules applicable to 403b's, I've looked at the regs and the IRS Pub 571. The regs seem to make it clear that the employer cannot provide a benefit in excess of the 415 limits (i.e., the test is an employer level test, based on the plan year).

But in pub 571, it seems to indicate that in addition to a "plan year" review by the employer, the employee also needs to run their own test based on their own taxable year. Am I understanding this correctly? Woluld this mean that as a TPA we should be reviewing calendar year data (even for fiscal year plans) to ensure compliance?

The test is actually quite complicated as I'm learning. It's complicated because of the definition of includible compensation, which could include comp from up to several years ago. It would seem to allow someone to go well over a qualified plan's normal 100% of comp limit, unless I'm missing something. Does everyone agree?

Has anyone seen a practical user friendly write up of these rules?

Austin Powers, CPA, QPA, ERPA

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