IRS personnel have stated that given the recent legislative changes, a participant can defer the maximum limit under 402(g) AND have up to 40,000 or 100% of compensation contributed to a defined contribution plan. I don't see anything in 415© that takes elective deferrals out of the definition of "annual addition". It would seem to me that if a participant deferred 11,000 in 2002 he could only have an additional 29,000 contributed to the plan on his behalf. Am I missing something or did the IRS personnel think (possibly) that the 404 change was across the board??? Thanks for your input.

You are correct, the elective deferral is included in the 415 limit but is not included in the 404 caluclation. Therefore, the maximum allocation to a participant in 2001 is only $40,000.

If you amend the plan to allow for catchp-up contributions, a 50 year old can receive a maximum allocation of $41,000. The extra $1,000 is not subject to the 415 limits.