415(b) Limit Question

[Lou S.]

I'm having a brain cramp. Employee age 70.

High 3 consecutive comp is years for participant is 99, 00 ,01

Actual comp 230K, 240K, 240K

401(a)(17) limit for years 160K, 170K, 170K

If Eggtra amendment so provides comp limit 200K for each year.

For purposes of the 100% of comp limit is his high 3 (230 + 240 + 240) / 3 = 236K

is it (160 + 170 + 170) / 3 = 166K

is it 200K if egtrra amendment allows for "walk back" of 200K comp limit?

[tymesup]

You can't go higher than 200K for 99, 00 or 01.

The average could be 167K or 200K, depending on the plan document and amendments.

[Lou S.]

I was afraid of that. Thanks. Fortunately though it won't cause an overfunding problem.

I was just thinking back to the days when uncapped actual salary was used for 415 limit was wondering if that got grandfathered when the IRS recently decided that each year was capped at the limit; I guess not.

[Calavera]

Grandfather rule for preexisting benefits is described under 1.415(a)-1(g)(4)