10500 LIMIT WHEN FISCAL YR & CALENDAR YR DIFFERENT

[Guest THOMAS TIERNEY]

I HAVE A FISCAL 401K PLAN WHERE A PARTICIPANT DEFERRED 12000.00 IN CALANDAR YEAR 2000. HE DID NOT EXCEED THE 10500 LIMIT IN PLAY YEAR, BUT DOES IT APPLY ON CALENDAR YEAR BASIS. REG 1.402(g)-1(d)(1) CONFUESES ME. i HAVE NEVER SEEN A W-2 WITH A DEDUCTION OVER THE CAP LIMIT.

[Guest xplan]

The deferral limit under IRC 402(g)is based upon the individual's tax year, not the Plan Year. Therefore, if they are a calendar year tax payer, they have exceeded the limit for that tax year. In order to avoid double taxation on the deferral amounts, they must be distributed by April 15, 2001.