LIMITS FOR NON-CALENDAR PLAN YEARS

[Guest CHRISTA]

When the plan year is 7/1/99-6/30/00, would the 402(g) limit be based on 1999 or 2000? (I need to process a refund, but should it be for the amount over $10,500 or $10,000?)

[Guest nherkowitz]

The 402(g) limit is computed on an individual participant basis on a calendar year, not on a plan year basis. This can make it difficult to determine the limit in a fiscal year.

It is possible that, in your example, the participant could withhold $10,000 in December, 1999 and $10,500 in January, 2000. This would still pass the 402(g) limits, even though the participant deferred $20,500 during the 7/1/99 to 6/30/00 plan year.

[rcline46]

I agree. You need to determine 402(g) on a calendar year basis regardless of plan year. If more than 10,500 has not been deposited in 2000 and not more than 10,000 for 1999, then there is no extra deferrals. Maybe failure of ADP but that's it.

[Guest]

in other words, looks at all his/her w-2's for 2000 and take total deferrals. At this late date that implies (ultimately) double taxation. Participant should have paid taxes in 2000 and then again when he gets the distribution.