9/30 Plan Year End and Catch Up

[Mr Bagwell]

Question about off calendar plan year and catch up.  Little different twist than the usual how much question.

Plan year end 9/30/2017.  HCE employee turns 50 in 2017.  Employee is on pace to defer 24,000 in calendar year 2017.  The catch up money would be in the 10/1/2017 to 12/31/2017 time frame.

I am calculating a cross tested contribution for the 9/30/2017.  The employee would not get the benefit of the 6,000 catch up at the plan year 2016 (9/30/2017 PYE) time frame would he?   Or to say another way, does the employee get the catch up benefit for 2017 at the 9/30/2018 PYE?

I need some clarification because I want to get this right at the get go.

[Lou S.]

When does he "exceed" a limit. That will determine which Plan year the catch-up is assigned to. A lot of it has to do with what plan year the contribution is tested in.

He only gets one calendar year catchup limit.

If he exceeds $18,000 in 1/1 - 9/30 plan year then that is catchup for calendar year 2017 and Plan Year 9/30/2017

There are other cases such as failed testing that might have the catch-up in PYE 9/30/17 or hitting another Plan limit, such as 415 that could make some of his 1/1/17 - 9/30/17 catchup in the 9/30/17 plan year.

It gets important to track which calendar year catch-up is assigned to which off calendar year plans for testing and allocation reasons.

[Mr Bagwell]

13 hours ago, Lou S. said:

He only gets one calendar year catchup limit.

I think this is the magic I was looking for.

He will not exceed the $18,000 in 1/1 to 9/30 plan year.  He will exceed the 18,000 in 10/1 to 12/31, which would be for PYE 9/30/2018.

From what you are saying I could not max him to 60,000 415 limit for plan year end 9/30/2017 because his catch up for 2017 will actually be in the 9/30/2018 PYE.

Please correct me if I said that wrong or if clarification needs to be done for the next guy down the line......

[Tom Poje]

I think example 5 of the regs (p35 - 36)  implies you can. even has a sentence, though it doesn't come into the example used.     so if he hit the 415 limit the deferrals made become catch up the calendar year they were made, if I understand things correctly.

Plan R does not limit elective deferrals except as necessary to comply with section 401(a)(30) and section 415. 

 

while I never used it, I do have an old worksheet someone created back in 2005 that might help. good luck.

catch up contribution regs.doc

catch up for non calendar year plans.doc

[K2retire]

21 minutes ago, Tom Poje said:

I think example 5 of the regs (p35 - 36)  implies you can. even has a sentence, though it doesn't come into the example used.     so if he hit the 415 limit the deferrals made become catch up the calendar year they were made, if I understand things correctly.

Plan R does not limit elective deferrals except as necessary to comply with section 401(a)(30) and section 415. 

 

while I never used it, I do have an old worksheet someone created back in 2005 that might help. good luck.

catch up contribution regs.doc

catch up for non calendar year plans.doc

I've used it many times. The tricky thing is to remember what was used for 9/30/17 when it's time to look at 9/30/18 and also calendar year 2017 (for the participant).

[Mr Bagwell]

I am still stumped on this topic. 

Based on Tom's comments above and the research I have done, it appears that the employee could get to 54,000, the 415 limit at the 9/30/2017 PYE.   The piece I am stumped on is how to make Relius accept the 6,000 Catch-up for 9/30/2017 PYE.  If I put in a 6,000 adjustment to 2017, the total at the end of calendar year 2017 would be 12,000.  I don't like that.  I could put in a 12/31/2016 adjustment to Relius and show 6,000 in Catch-up in 2016 and then I could get to 54,000 for the employee.  But that looks weird too..... because employee did not become age 50 in 2016.  It's not an audited plan, and could explain the adjustment if needed, but.....

I have attached a spreadsheet of the deferrals for 2016, 2017, and the 9/30/2017 plan year for reference.

Thanks for the help.

Catch-up Scenario.xlsx

[Tom Poje]

non calendar year plans and catch ups, etc give me headache

never tried this before, but maybe the system could be tricked, in census   reg. compliance/additional test amount there is a field for

other plan amount. so if you enter 6000 there maybe the system will think he has an extra 6000 toward the 415 limit and so treat 6000 in deferral as catch up. then if it works you could take out the amount. grasping at straws....

[Mr Bagwell]

I can trick the system by putting a 6,000 catch up contribution amount into 2016.  This entry would get him to 60,000 for 415.  Would you be comfortable with that?