As a further opportunity to think about when looking at Plan Year 2012, Prudential has issued some information guidelines for plan administrators to consider in both ERISA and non-ERISA qualified DC plans and 403(b) plans.
To that end, remember the basics:
The 2012 compensation limit is $250,000 – so when performing nondiscrimination tests and determining contributions and tax-deductible contribution limits, that's the magic number.
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The annual deferral limit for a participant's contributions to a 401(k), 403(b) or section 457 plan cannot generally exceed $17,000, though the 401(k) and 403(b) deferrals do not reduce the limit on deferrals to a 457, meaning an additional $17,000 could be contributed there. Some plans also allow participants aged 50 or over to contribute $5,500 in catch-up deferrals.
Excess deferrals must be distributed back to the participants, plus related earnings, by April 15, 2013.
The annual additions limit, which covers employer contributions, employee post- and pre-tax contributions and forfeitures reallocated to participants are limited to the lesser of either $50,000 or 100 percent of an employee's compensation.
Actual Deferral Percentage tests need to be performed by a 401(k) plan by the last day of the plan year to make sure that highly compensated employees do not contribute disproportionately more than non-highly compensated employees – if the plan fails the test, the excess contributions must be corrected.
Actual Contribution Percentage tests must be performed, even by 403(b) plans, by the last day of the plan year.
The Form 5500 needs to be filed with the IRS and the DOL by the last day of the seventh month after the end of the plan year, though a 2 and a half month filing extension can be requested.
All records of non-discrimination testing must be kept.
Any plan amendments – including catch-up contributions, designated Roth contributions or in-plan Roth rollovers – need to be adopted by the last day of the 2012 plan year.
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