I have a new 401(k) plan with an effective date of 1/1/2001. The first date that participants could actually defer into the plan was September 2001. When calculating the ADR's for the participants, do I include only their compensation paid from September through December or the enitre plan year?
I was curious if anybody knew of a cite or reference on how to properly handle this. I would lean to the more conservative approach and use the full year compensation, but this seems unfair to the two HCE's in the plan. Particularly considering there were a few employees that would have been eligible to defer if they hadn't terminated before September 1st.
Thanks
Steve
