415 and noncalendar year

[DPL]

Company has 401k plan and an ESOP with 10/31 yearends.  Plan year is limitation year.  Age 60 Participant defers 22,000 in calendar 2015.  None recharacterized as catch up on the 10/31/15 ADP test.  $2000 of that amount was deferred in Nov and Dec 2015.  In 2016, participant defers 16,000 from 1/1/-10/31/16.  415 additions from both plans = $63,000.  How much can be called "catchup" and not be subject to 415 correction?  $6,000 or $8,000?

[Mike Preston]

1 hour ago, DPL said:

Company has 401k plan and an ESOP with 10/31 yearends.  Plan year is limitation year.  Age 60 Participant defers 22,000 in calendar 2015.  None recharacterized as catch up on the 10/31/15 ADP test.  $2000 of that amount was deferred in Nov and Dec 2015.  In 2016, participant defers 16,000 from 1/1/-10/31/16.  415 additions from both plans = $63,000.  How much can be called "catchup" and not be subject to 415 correction?  $6,000 or $8,000?

How is the bolded language possible with $20,000 deferred from 1/1/2015 - 10/31/2015?

What period is covered by the $63,000?

Others may want to chime in with suggestions when questions are not fully formed.  I usually don't.

[ESOP Guy]

The only way I know how to do this right is chart it out in a spreadsheet. 

You need to keep straight the Annual Additions are plan year based and the 402g limit is always a calendar year limit.

1) So you make the first cell in your spreadsheet 1/1/2015 to 10/31/2015 deferrals. 

2) Next is you need a cell that is 11/1/2015 to 12/31/2015 deferrals.

3)You next need a 1/1/2016 to 10/31/2016 deferrals in a cell.

4) You need 11/1/2016 to 12/31/2016 deferrals in a cell.

5) Since you are asking for PYE 2016 Annual additions you need all annual additions beside 4k in the last cell.

A) 1+2 = is what is compared to 402g for 2015.  Was there any catch up in 2015.  If so, we tend to treat them as being part of 2 so it is in the current plan year.  I am not sure I can give you a cite.  I have been doing it that way for a long time.

B) 3+4= is what you compared to 402g for 2016.  Same assumption it is 4 where there is it went over the limit

5+3+4= Total Annual additions for PYE are you over 415 limit?  If so, is there any room in catch up from B as we tend to use that same thing we use PYE to decided what calendar year to do the shift. 

 

I hope I did that right.  We have a standard spreadsheet around here we use. 

I am not sure I can give cites on using those end of the year of PYE as the point the overage happens but we are consistent on it and doing for a very long time. 

 

[Tom Poje]

ESOP Guy

Line 3 above needs to be edited as those dates are impossible unless you have powers beyond things I understand.

(one of your rare typos, maybe the first I have noticed)

 

I assume it should be 1/1/2016 to 10/31/2016

[ESOP Guy]

Thanks Tom