New $10,500 calendar year limit as applied to non-calendar plan year

[Guest Sue Michalski]

We seem to be having a problem with non calender year plans

since the limit is now 10,500 instead of 10,000. Quantech is stopping the person at 10,000 instead of letting them go up to 10,500. I can see a couple of ways to catch it. We change the override in plan specs to 10,500 after the year changes, or keep the apply limits button on in the contribution transaction and when someones deferrals don't get applied, it gets researched.

Both ways are alittle to manual for me. Anyone have any other suggestions?

[Alan Simpson]

Has you plan limits table been update to the $10,500 or is it at $10,000 for the 2000 plan year? If it is still at $10,000 that probably is the root of the problem.

[Guest Sue Michalski]

yes, our limits in the tables are correct. They are at 10500

for 2000.

[Guest]

actually, at the moment, all appears to indicate that the new limits will be 35,000. it is an election year, and I doubt that Congress will change anything, but who knows.

But according to the current regs, the annual addition limit will indeed be 35,000 for plan years ENDING in 2001.

(for those that don't know, annual additions are based on plan year end not plan year beginning)

(I will cover this topic of 'limits', how they are determined, etc. at the Southern User Group meeting in Aug - along with some other pension related issues as well - e.g. using the 'shift' option in the ADP / ACP test.

Anyway...

I have contacted an indiviual at Quantech a couple times

about this. (I expressed a concern about this back in April when it first appeared that the limit would go to 35000) My most receny contact was as of last week. I have not heard back at this point in time. This can, or will be a serious problem. I asked, and nothing has been done at 6.0 either. I do not know if the problem will be fixed at both 5.0 and 6.0.

A SOLUTION! or at least the best I can come up with. put the following in other plan amount '-5000' on people with large compensation and code the plan 'other plan type' as defined contribution. this will trick the system into giving the ee an extra $5000. However, you will have to watch out for 25% of pay on those individuals. It works, I just tried it - sorry i don't have anything better to suggest.