Fiscal Year Catch Up

[RobN]

One HCE with no Deferral for the Plan Year ending 2/28/10.

Deferrals for 3/1/10 to 12/31/10 total $18,492.66

Deferrals for 1/1/11 to 2/28/11 are $6,058.20

What is maximum catch-up that is available for Plan Year ending 2/28/11 ADP Test? I'm thinking $5,500 for 2010 and $5,500 for 2011.

[ETA Consulting LLC]

While the maximum catchup would be $11,000 since it spans two calendar years, the year of catchup would depending on the calendar year for which the excess deferrals (term used lightly) would be attributed. For instance, you know that $1992.66 is already a catchup for 2010. You also know that ADP failures come from the first deferrals made, so would begin to take from 2010 deferrals. Subsequent catchup would then come from the deferrals made in the first part of 2011. It would be best to write out your 'flowchart' on the sheet of paper to ensure your timing is correct.

Good Luck!

[Lou S.]

Any deferrals from 1/1/10 - 2/28/10? Or any 2010 recharaterization on 2/28/10 test? It wasn't mentioned so I'll assume no.

2010 Catchup is 18,492.66 - 16,500.00 = $1,992.66

Amount tested in 2/28/11 ADP is $16,500 + 6,058.20 = 22,558.20

Up to $5,500 additional can be recahraterized as 2011 catchup if test is failing.

[RobN]

<<<Any deferrals from 1/1/10 - 2/28/10? Or any 2010 recharaterization on 2/28/10 test? It wasn't mentioned so I'll assume no.

2010 Catchup is 18,492.66 - 16,500.00 = $1,992.66

Amount tested in 2/28/11 ADP is $16,500 + 6,058.20 = 22,558.20

Up to $5,500 additional can be recahraterized as 2011 catchup if test is failing. >>>

There were no 1/1/10 through 2/28/10 Deferrals. I understand what you're saying, and that is where my question comes in: You're saying I get $1,992.66 for 2010 Catchup versus a potential $5,500 for 2010 Catchup.

Assume the ADP Test won't pass unless there is $11,000 overall classified as Catchup for the PYE 2/28/11, I would think I'd get to use $5,500 as 2010 Catchup, as "ERISAtoolkit" seems to agree too.

[Kevin C]

You can only reclassify as 2010 catch-up if the amount is treated as catch-up as of a date during the 2010 tax year. See 1.414(v)-1©(1).

The timing rules for catch-ups are in 1.414(v)-1©(3). ADP testing is a plan year limitation, so the determination of catch-up resulting from ADP testing is as of the last day of the plan year.

When you put it all together, you get Lou's answer.