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Gap Income

Last Updated March 20, 2009

Definition

Also referred to as gap-period income

Income accrued after the close of the plan year and prior to the distribution being processed to the participant

 

Referring Cite

Treas Reg §§1.401(k)-2(b)(2)(iv)(D), 1.401(k)-2(b)(2)(viii),

Additional Helpful Information

  • Safe harbor method of allocating gap period income. --A plan may use the safe harbor method in this paragraph to determine income on excess contributions for the gap period.
  • Alternative method for allocating plan year and gap period income. --A plan may determine the allocable gain or loss for the aggregate of the plan year and the gap period by applying the alternative method .