I am little confused about how and when the 402(g) limit applies to NQDC plans linked to 401(k)s. I believe that the 402(g) limit will apply to NQDC contributions only if there is this mid-year type of election (for example, NQDC contributions kick in mid-year once the 401(k) plan fills up). I also believe that the 402(g) limit would not apply to the NQDC plan where the NQDC plan fills up first and is then reduced by the maximum allowable contribution to the 401(k) (as explained in example 12 of the proposed regulations). Does anyone agree with this or have any comments?

If a midyear change in the 401(k) plan affects the deferrals into the nonqualified then you potentially have a problem and the regs bring a safe-harbor rule into play involving 402(g) limits applying to the amounts deferred under the nonqualified.