Annual additions limit for non-calendar plan and 401(k) deferrals greater than the calendar year limit.

[AJC]

A 401(k) plan operates on a fiscal year - July 1st through June 30th. The plan document defines the limitation year as the plan year for everything (except for the deferral limit). For the plan year ending June 30, 2022, an employee under the age of 50 has contributed $25,000 in 401(k) deferrals during the plan year (though never exceeding the calendar year limit). The annual additions limit is $58,000. The deferral limit is $19,500.

Had the employee deferred only $19,500 during the plan year, he would receive an employer contribution of $38,500. By deferring $25,000 during the plan year, is this employee limited to $33,000 of employer contributions for the plan year ending June 30, 2022?

 

[AJC]

Well, I believe I found the answer. It seems the employee should pay attention to his deferrals or risk a reduced employer contribution.

[Lou S.]

Sounds like you found your answer but it is probably addressed in your plan document. Some documents will call for a refund of deferrals so the participant gets the full employer contribution, others will limit the employer allocation to not exceed the 415 limit.