Off-Calendar year end plan, catch-up contributions

7-31-17 year end plan

Participant over 50 deposits max  DC plan limit profit sharing during the plan year as well as $8000 salary deferrals.

Per calendar-year his deferrals are below the calendar year catch-up limit each year, however during the plan year they are as stated above. 

Because he exceeded the 415 limit instead of the 402(g) limit, must I limit his catch-up to 6,000 for the plan year?  Or may I assign the "catch-up" contributions to the year they were deferred  (thus, allowing all of his contributions for the plan year).

Most threads I have seen regarding fiscal year catch-up are tied to 402(g) limits and ADP corrections, so thank you in advance for answering if previously discussed.

In this case you will need to limit catch-up to $6,000 for the 2017 year. There is no catch-up for the 2016 year because he did not exceed any applicable limit.

Please allow me to add, that in the 15-16 plan year, he had a maximum profit sharing contribution as well as 1K of salary deferrals. (all characterized as catch-up, ee contribution all deposited in calendar year 2016)

(no limits exceeded for the 14-15 plan year)

My confusion is which year and for what to count things I guess, it being that the plan year that the catch-up is attributed to may not be the year in which it was deferred from pay.

I usually need to make a chart to make sure I've got the deferrals, catch-ups, and 415 limits in the right years.

You have to make sure you are not violating 402(g) or Catch-up in any calendar year.

And you have to make sure you don't violate 415 in the limitation year.

It's usually pretty easy to follow when a guy puts in the max deferral per calendar year, it can get confusing when you can can't use catch-up rules when you aren't hitting the max.

My understanding might be off but I don't think you can bring the prior calendar year limit into the current limitation year, but you might be using some the prior year limit in current limitation year if you exceed the catch up in the 2nd half of the prior calendar year that falls in the current plan year.

The timing of the 401(k) deposits can also come into play.

Here are the questions that require answering:

1. Is there a Plan imposed limit?  If so, what is it?  If not, skip to 4.

2. Does the plan require correction under 415(c) before correcting for a Plan imposed limit?

3. Are violations of a Plan imposed limit included in ADP  testing?

4. What is the 415 dollar limit?  $54,000? Other (Sometimes documents are drafted poorly)?

5. If 415(c)(3) compensation is less than 4, what is it?

6. What are the annual additions other than from elective deferrals for the limitation year? (Usually the plan year ending July 31, 2017)

7. What amount of catchup limit was used as of the end of the year ending in 2016 (7/31/2016)?

8. What were the deferrals from 8/1/2016 through 12/31/2016?

9. What were the deferrals from 1/1/2017 through 7/31/2017?

10. What were the deferrals from 1/1/2016 through 7/31/2016?

11. What is the ADP limit for the plan year ending 7/31/2017?

If you try to do the calculation without knowing the answers to all of these questions there can be  circumstances that trip you up. 

Mike:  I used whole numbers in my above, but here it all is:

No Plan limit, skip to 4

415 dollar limit is 54K

415 comp is maximum

Annual additions are PS 53K + deferrals  8175.67

Catch-up used as of 7-31-16 was 1285.71

Deferrals 8-1-16 through 12-31-16 4714.27

Deferrals 1-1-17 through 7-31-17 3461.4 

Deferrals 1-1-16 through 7-31-16 is 1285.71, these were the only deferrals for the 7-31-16 plan year and they were all above the DC Plan limit deposited PS.

ADP will pass

I was hoping I would find that I could assign my second half 2016 deferrals as 2016 catchup, making all of his deposits allowable, rather than having to limit his catch-up for 7-31-17 plan year to 6K.  Reading 414v, over and over, hasn't convinced me of that, but I still feel like it's only fair...  

Second half??? Do you mean the last 7 months of the year in question? Assuming you do I don't think there is any alternative but to treat $1,175.67 as an excess that may not be characterized as catch-up contributions.  Corrective action is required.

I meant I was hoping that the first 5 months of the 7-31-17 plan year, Deferrals 8-1-16 through 12-31-16 4714.27, could be called 2016 catchup...

The only way that is ever possible would be if there was some sort of plan imposed limit.

Thank you both for your help.