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February 23, 2009

Gap Income

Your Guide



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 .

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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