Application of 402(g) Catchup for Non-Calendar Plan Years

[KJJ-TPA]

Can 402(g) catch-up from the previous calendar year be used in the calculation of 415 annual additions maximum for the plan year?

 

Example for a PYE 3/31/2021

401(k) deferral amounts for Participant X:

    - 1/1/2020-3/31/2020  = $5,200

    - 4/1/2020-12/31/2020 = $15,600

    - Total 2020 calendar deferrals = $20,800

 

In PYE 3/31/2020 - $5,200 of the 2020 402(g) catchup was used to allow for a Participant X's annual additions of $62,200 ($57,000 + $5,200).

    - This should mean $1,300 ($6,500 - $5,200) is still available for 402(g) catch-up, for the 2020 calendar year  - The question is regarding the use of this $1,300.

 

Deferrals 1/1/21-3/31/21 = $6,200 – using as 415 catch up

 

Would the maximum annual additions for the PYE 2021 be $65,500 ($58,000+$6,200+$1,300) ?

OR would the maximum annual additions for the PYE 2021 be $64,200 ($58,000+$6,200)?

 

Thanks!

[Lou S.]

I don't believe you can use the 2020 catch-up and carry it forward to 2021. You either have to use it for exceeding the 2020 415 limit (which you did on PYE 3/31/20) or for exceeding the 2020 402(g) limit which the participant has not done with the recharactherized catch-up on the 3/31/20 PYE.

 

[KJJ-TPA]

On 4/23/2021 at 3:37 PM, Lou S. said:

I don't believe you can use the 2020 catch-up and carry it forward to 2021. You either have to use it for exceeding the 2020 415 limit (which you did on PYE 3/31/20) or for exceeding the 2020 402(g) limit which the participant has not done with the recharactherized catch-up on the 3/31/20 PYE.

 

Thanks Lou!