Testing for combo plans - fiscal year

Hi

Looking into a cb/dc combo for someone - both the sponsor and plan years are fiscal e.g. 7/1/2020 to 6/30/2021. Never worked on fiscal combo before.

DC has 401k + 3% non-elective safe harbor + profit sharing provisions.

A theoretical question:

The participant defers max for 2020 from 7//1/2020 to 12/31/2020 and max for 2021 from 1/1/2021 to 6/30/2021. So defers 39k within 12 month period. Salary and election to defer maximum from each paycheck - very high #.

Based on above, I should be checking for the following:

• Full 39k is included in the 410b testing
• Only one catch up? I have no idea on this especially if does catch up twice within one plan year.
• As the 415(c) limit is annual and within the plan year, the 58k limit is reduced by 39k of deferrals + 3% safe harbor this leaving very little for profit sharing (assume limitation year is plan year). So more goes to 410(b) and less goes to 401(a)(4).

Am I missing anything?

As someone mentioned during Derrin Watson's webinar last month, fiscal plans should be illegal especially with 401k features.

Thank you

1 hour ago, Jakyasar said:

The participant defers max for 2020 from 7//1/2020 to 12/31/2020 and max for 2021 from 1/1/2021 to 6/30/2021. So defers 39k within 12 month period. Salary and election to defer maximum from each paycheck - very high #.

No. Even though 402(g) is on a calendar year basis, 401(a)(30) is on a plan year basis.

They can do two catch-up limits in the first plan year, though.

If you mean the full $39K in the average benefits test, yes.

As for catch-up the timing of deposits matter. If you exceed the 402(g) limit in calendar year 2020, they the amount in excess of the of the 402(g) limit in 2020 would a 2020 catch-up, assuming none of the 2020 cacth-up limit was already used in the PYE 6/30/2020.

For 2021 calendar year there is only one catch-up limit so if they exceed 402(g) or 415 and are catch-up eligible you can recharaterize.

Are they 50?  If they did 19,500 + 19,500 exactly it at least hints that they're not.

The question was theoretical with the assumption that they will be making 2 catch up within 12 months. Thank you