A 401(k) has a plan year that runs 7/1 through 6/30. During calendar year 2002, a HCE contributes up to the 402(g) limit of $11,000 and thus can make a $1,000 catch-up contribution to get to $12,000. Starting 1/1/2003, the HCE decides not to contribute anymore to the 401(k) so for the Plan Year Ending 6/30/2003, his total deferrals are below any sort of Plan or ADP Testing limit.

My question is how is the $1,000 that was a catch-up contribution in 2002 treated for the 6/30/2003 PYE? Is it still considered a catch-up contribution for testing purposes? Or is it not a catch-up because the participant has not exceeded any Plan or ADP limit for the Plan Year?

Thanks!

BTH

The participant exceeded the 402(g) limit for the calendar year 2002, which is a reason to allow for the catchup. Therefore, as long as the plan has been amended to allow for catchup contributions, the $1k catchup should be excluded from ADP testing for the 6/30/03 plan year test.

I was thinking that would be the case and it makes sense that the catch-up rules would work that way. But, as with many things in this business, you never know...

Thanks for the help.

BTH