FAQ 795: 402g--Test says no one exceeded the limits on short plan year


I have a plan that has a short plan year 4/1/2007 - 12/31/2007. I coded the Plan Year Begin as 4/1/07, the Plan Effective date as 4/1/07, the Valuation Date as 12/31/07 and the Valuation Frequency as "1-Year End". When calculating 402(g), it tells me that no one exceeded the limits. I changed the plan Year Begin and Plan Effective date to 1/1/07 and re-ran 402(g), this time it gave me the correct catch up amounts. Is there something I am missing on the coding for a short plan year?


You should be able to code the plan year back to 4/1/2007 through 12/31/2007 and still get the 402(g) routine to produce the correct results by changing one setting on the 402(g) setup screen. When running the test, select the "Use plan year values" option in the upper right corner of the screen instead of "Use calendar year values". When the system looks at the plan year and it does not start at 1/1, it thinks that it is an off-calendar year plan, so it defaults to using the calendar year values that would be stored on the Catchup Off Year screen for a non-calendar year plan. In your case, it is still a calendar year plan, it is just a short year, so you want to have the 402(g) routine use the plan year values, so that it will just read the deferral amounts from the Contributions screen.

If you change that setting when running the test, you should see the catch-up amounts that you are expecting. If you do not, please send us a portable copy of the plan and tell us what other defaults you are changing when running the 402(g) routine.