Compensation year overlaps but does not equal plan year.

[Guest John Wade]

If I have a defined benefit plan with a compensation year of 01/01/2000 to 12/31/2000, a plan year of 12/31/2000 to 12/30/2001 and a prospective valuation date of 12/31/2000, does this present any problems for either valuation or benefit accrual purposes?

[AndyH]

You might have a 415 issue. I have a similar situation that I've been wrestling with. I think the 415 limit for, say, someone retiring in November would be based upon the first day of the plan year in which the retirement date falls (i.e. the preceding calendar year, not the current calendar year). Hopefully I'm wrong, and somebody can convince me of that, but that appears to be the case.

Mine is a 7/1-6/30 with calendar year pay, so I think it would be a problem for somebody retiring in May, but not July. Yours is not as easily avoided.