415 and NonD Testing

[retbenser]

IN calculating the normal accrual rate and most valuable rate, do you take into consideration the 415 limit?

For example, if formula is 10% of pay and benefit is hitting the $195,000 limit, is NAR = 10% or 0% (assuming no increase in 415 limit)

Thanks for all responses.

[AndyH]

Usually yes.

But you can do it either way. There may be a year to year consistency requirement in 1.401(a)(4) however; you should check that if you plan to change.

[retbenser]

Normall, yes.

But you can do it either way.

So NAR for HCE at 415 limt = 0% (assuming no increase in $195,000).

Is that correct?

Thanks.

[AndyH]

Normall, yes.

But you can do it either way.

So NAR for HCE at 415 limt = 0% (assuming no increase in $195,000).

Is that correct?

Thanks.

If he has fully accrued the 415 limit yes. You should read 1.401(a)(4)-3(d)(2)(B) to make sure you don't have an issue with a provision dealing with 415 increases for past employees. Not likely, but you never know.