FAQ 2201: 402g Example - Off-Calendar - Prior Plan Year Catchup

Problem: How to setup or administer participant catchups for an Off-Calendar plan year with "Prior Plan Year Catchup".

Solution: FACTS for 3/31/2020 plan year 401(k) Contribution for 01/01/2019 to 03/31/2019 $18,461.20 401(k) Contribution for 04/01/2019 to 12/31/2019 $5,538.80 401(k) Contribution for 01/01/2020 to 03/31/2020 $20,461.20 3/31/2019 ADP Excess reclassified as catchup $6,000 Initially, the CATOFFYR screen will have the below values *1/1/2019-3/31/2019 - DEFERRAL field: Contribution of $18,461.20 less the $6,000 that was recharacterized as ADP catchup for 3/31/2019 PY LIMITCAT screen shows 3/31/2019 ADP catchup of $6,000.00 in the "Prior Plan Year Catchup" field. In the Employee CONTRIB screen shows $26,000 deferrals for the Plan Year from 4/1/2019-3/31/2020 Run both the 2019 and 2020 calendar year 402(g). Employee would not be reported on 2019 402(g) because CATOFFYR values for 1/1/2019-12/31/2019 only equal $18,000 with is below the 2019 402(g) limit of $19,000. The Employee should show $961.20 catchup on 2020 402(g) test based on the $20,461.20 reported in the 1/1/20-3/31/20 field on CATOFFYR since it exceeds the 2020 402(g) limit of $19,500. After running 2020 402(g), the CATOFFYR screen will be updated to reflect 2020 catchup. The $20,461.20 amount in 1/1/2020-3/31/2020 field now shows $19,500 which was reduced by $961.20 2020 402(g) catchup. At this point, the Employee CONTRIB screen shows deferrals of 25,038.80. ADP deferrals to be tested for plan year 4/1/2019-3/31/2020 = $25,038.80 Original $26,000 less $961.20 2020 402g catchup. And at this point, employee would have $5,538.80 left of 2020 catchup that can be reclassified for ADP purposes this year. Let's say the plan failed ADP and used the full $5,538.80 left of catchup to reclassify the ADP excess.... Now the CATOFFYR 1/1/2020-3/31/2020 amount of $19,500 is reduced by the $5,538.80 to now show as $13,961.20. When you roll the plan forward to the next year, that $13,961.20 will get carried forward and you will just need to fill in the 4/1/2020-12/31/2020 and 1/1/2021-3/31/2021 fields and repeat the process above! For additional information please refer to the Compliance Manual which can be accessed from the ASC menu by selecting Help - Manuals. Review information in Appendix 4 pdf page 358. Also, you can view a webcast called "Off-Calendar Year Testing and ADP/ACP Testing" for more information. The webcast can be accessed in Client Support Center by selecting the tab System Training - Web Seminars - Recordkeeping and Compliance.