Full Version: Catch Up Contributions & Avg Benefit % Test
Are Catch up contributions taken into account when computing the Average Benefit % Test?
No if testing on annual basis. Prior year amounts (with earnings) ARE included if testing on accrued to date.
QUOTE (Mike Preston @ Dec 24 2008, 03:53 PM) 
No if testing on annual basis. Prior year amounts (with earnings) ARE included if testing on accrued to date.
Why the different treatment just because the testing method is different? Is this a word of mouth or a written guidance? If written, do you have the cite?
because 1.414(v)-1(d)(3)(ii) says catch up from prior year would be included in the account balances taht are used to determine avg ben percentage if allocation from prior years are taken into account.
but mostly,because Mike says so.
but mostly,because Mike says so.
You got that right.
QUOTE (flosfur @ Jan 21 2009, 03:56 PM)
QUOTE (Mike Preston @ Dec 24 2008, 03:53 PM)
No if testing on annual basis. Prior year amounts (with earnings) ARE included if testing on accrued to date.
Why the different treatment just because the testing method is different? Is this a word of mouth or a written guidance? If written, do you have the cite?
I agree with the prior responses. Regarding why the regulations provided that rule, the IRS did not permanently want to require recordkeeping systems to keep catch-up contributions (and investment earnings on them) as a source separate from the regular pre-tax deferrals.
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