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ADP refunds processed after 12-month deadline


Guest TaxedToDeath

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Guest TaxedToDeath

A plan failed its 2012 ADP test but the refunds were processed in 2014. Can EPCRS be used? :unsure:

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Yes. If you already did the refunds, than a 1-to-1 QNEC should probably be done.

Problem might be that you cannot disaggregate the otherwise excludables. So, if you have to re-run the test with everyone in it, you may get higher refunds.

SCP, not VCP, though.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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  • 6 months later...
Guest skim401k

After all my research, I couldn't identify where it says that employers using the prior year method have a different way of correcting untimely ADP corrections (past the 1 year correction period) than employer using the current method.

Do you think only 1-to-1 QNEC with refunds option is available for plans that use the Prior Year method? And that the QNEC option is only available to current year plans and that prior year plans must use the One-to-One Method to correct?

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my copy of Rev Proc 2013-12 (EPCRS)

under Appendix B One-to0one correction method (1)(b)(iv)(B)(2) [page 91] says

(2) This paragraph (1)(b)(iv)(B)(2) applies to a plan that uses the prior year testing method described in §§ 1.401(k)-2(a)(2) and 1.401(m)-2(a)(2) and, for periods prior to the effective date of those regulations, Notice 98-1. Paragraph (1)(b)(iv)(B)(1) is applied by substituting "the year prior to the year of the failure" for "the year of the failure."

so unless something has changed in the last year I know nothing about it appears you can use this for prior years.

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Guest Rebel TPA

What about a situation where a new plan using prior year testing and the "deemed 3%" rule fails ADP testing and didn't make the refunds within the 12 month deadline? I didn't see anything in EPCRS addressing that scenario. It doesn't seem logical to me that I should make the QNEC to NHCEs from the prior year when the plan didn't exist in the prior year.

The EPCRS correction method doesn't allow disaggregation of otherwise excludable employees. Are we required to use the EPCRS test results as our prior year percentages for the following year or is the restriction solely for the calculation of the refund and QNEC?

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