Plan and fiscal year don't match

I'm having difficulty wrapping my head around a screwy situation.

Plan year is calendar year 2018. Limitation year is 2018. Fiscal year is 4/1/2017 - 3/31/2018. Extended tax filing deadline is 12/15/2018.

Plan excludes pre-participation compensation.  Eligibility is 3 months/250 hours, monthly entry.

Participant is hired in 2018 - let's say on June 14th, enters plan October 1, 2018. Compensation form Date of Participation is, say, $30,000.

Prior TPA has been allocating contributions made for a given fiscal year for the prior plan year, based upon prior plan year compensation. Example - for 2017 plan year, allocations were made based on 2016 calendar year compensation.

I don't see how this can work. While you can theoretically allocate a contribution made in a current plan year, with the fiscal year ending in the current plan year, for a prior plan year, how can you allocate for 2017 (in the circumstances above) based on 2018 participating compensation, when the only participating compensation is during plan year 2018? There is no 2017 plan year compensation.

Am I missing something?

The plan document should state the basis on which compensation is determined and upon which allocations are made, including the applicable time period. Unless the document says something different, you allocate 2018 calendar limitation year/plan year contributions on the basis of 2018 compensation. The fact that there is a different fiscal year does not impact the allocation, it only impacts the tax-year of deduction. It appears the prior TPA was allocating as if the plan year was the same as the fiscal year, which as you surmise, is wrong.

Thanks - yes, plan doc defines compensation and limitation year as the plan year (calendar). The whole situation does present some logistical difficulties, as the deduction is being taken for the fiscal year ending in the plan year, yet the extended tax filing deadline falls December 15th, which is before the 2018 compensation is even finalized. They should probably amend their plan year to track with the fiscal year...