Plan year change - compensation

[Jakyasar]

Current plan year is from 12/1/18 to 11/30/19. Compensation is defined as calendar year ending within fiscal year. for this plan year, it is 2018 w-2.

Switching the plan year to 12/1/19 to 12/31/19 i.e. a short plan year.

Assuming that will need to use the full 2019 w-2 for the short plan year, what proration is required if any, dc and db plans purposes other than hours?

Thank you

[Luke Bailey]

Jakyasar, not sure exactly what you are asking, but assuming the plan and limitation years were the same, and will stay that way, you will have a short limitation year and will need to prorate (1/12th) the 415 limit. See Treas. reg. 1.415(j)-1(d)(2).

[Jakyasar]

Thank you for your response. Plan and limitation years are always the same so short plan year=short limitation year.

Do you agree that I need to use the 2019 w-2 for the valuation? It is DB plan, sorry forgot to mention. No adjustment to the 415(b).

Thank you