Off Calendar Catch Up Question

Off calendar plan year ends 10/31/21.

In calendar year 2020, the participant deferred $26,000 from 1/1/20 to 10/31/20.  So all of the catchup in 2020 was used for the plan year ending 10/31/2020.  No deferrals were made from 11/1/20 to 12/31/20.

From 1/1/21 to 10/31/21 the participant will defer $22,000.  $2500 of the deferrals will be catchup for the plan year ending 10/31/21.

I'm thinking when I allocate profit sharing to this participant I can allocate $42,500.  $2500 is treated as 402g catchup, and $4,000 is treated as 415 catchup.  The total allocated for the plan year would be $64,500.

Further, if the participant defers an additional $4,000 from 11/1/21 to 12/31/21 (for a total calendar year deferral of $26,000), those deferrals would be catchup for the plan year ending 10/31/22.

Note, this is a safe harbor 401(k) so ADP refund catchups are not a factor.

Am I thinking through the catchup process correctly?

Thanks very much.

Close if is total allocation is $64,500 for PYE 10/31/21 then you've used up 100% of the 2021 catch-up limit for 2021 when you recharaterize for exceeding 415 limit. If he defers another $4K from 11/1/21 - 12/31/21 (which he can) that can't be recharacterized at all in the 10/31/2022 Plan year. That is those deferrals will count against his 415 limit in the 11/1/2021 - 10/31/2022 Plan year with no ability to treat them as catch-up because the catch-up was used as of 10/31/2021.

Thank you Lou.  Would the answer be different if we did not allocate the additional $4,000 as a 415 catchup for the plan year ending 10/31/21?

In that case would the $4,000 deferred from 11/1/2021 to 12/31/2021 be treated as catchup for the plan year that ends 10/31/2022?

Thanks.

If you don't use any catch-up for calendar year 2021 in the 10/31/2021 PY, they any deferrals that are over the 402(g) limit in the 11/1/21-12/31/21 period of the 10/31/22 Plan year are catch-up contributions since they are deferrals about the applicable limit.

I have to looks up the rules every time on a non-calendar year plan when these things come into play because it can be a bit confusing when you can recharaterize and when you can't as timing becomes important.

Thanks very much Lou, especially for that last part.  I've had this plan for years and every year there is something different about they way the owner's deferrals fall between the calendar and plan years that have me questioning.

I appreciate the information.