ADP test for SARSEP

[FJR]

Don't know SARSEPS, but does the ADP test for these plan run similar to qualified plans. For example

1. Is compensation capped at 200,000 for average deferral

2. Can compensation for test be net of deferal

Also,

when allocating a employer contribution, is it allocated net of deferals or is it gross comp?

Thanks.

[Archimage]

I haven't done one of those in a while. If my memory serves me correctly, I believe every HCE has to be tested separately and the 2+/2% spread is not available. In other words each HCE's deferral percentage must be no higher than 1.25% above the NHCE ADP.

[Bird]

Yes, each HCE is limited to 1.25 X the NHCE average.

There's also a 50% participation requirement.

Comp is capped at $200,000, as indexed. It'll be defined in the plan document and would most likely include deferrals, for testing or allocation purposes.