off calendar year

[thepensionmaven]

Question has come up as to whether a new 401(k) plan, either SH or traditional, can have a plan year off calendar year.

SH 3% would be using W-2 for cal year ending w/in plan year.

Have never seen a 401(k) off calendar year, but see no reason why not.

[Lou S.]

There is no prohibition against non-CYE 401(k)s.

Can be a bit of pain in the applying the catch-up rules. but nothing wrong with them at all.

We do a few but CYE 401(k) plans are generally a bit less complicated.

 

 

[CuseFan]

plus the deferral limit is individual calendar year limit, which can result in some weird looking PY 401k contributions - but if SH, testing isn't an issue and if payroll has the proper controls/shutoffs, shouldn't be an issue. having a fiscal year plan helps if you add a second aggregated for testing plan like cash balance, because they have to have same PY to combine for testing.