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We have a failed 2015 ADP test that was not corrected timely. We are now correcting under ECPRS using the one-to-one correction method. Our intention is to allocate the QNEC to employees who were NHCEs in the year of the failure and are also NHCEs in year of the correction. If allocated this way, three NHCEs would receive a QNEC allocation of greater than 5%, while three would not receive a QNEC at all (they are no longer employed). Is this allocation permissible using the one-to-one correction? Any insight is appreciated! Thanks

A plan fails the ADP test for 2018 and refunds are made by March 15, 2019. It is later discovered that there was an error in the test and additional refunds need to be processed. Is the excise tax due on the full refunds or only those made after March 15?

I am running an ADP test for a short plan year 1/1 to 5/31. Can I use $6,000 for catch up to offset my ADP refunds?

Hello! Long time lurker, first time poster. I'm still relatively new to the game but I've completed the requirements for my QKA and I know enough to know there's still a lot I don't know yet. We've taken over a plan and the plan contact informed a member of our admin team that their prior TPA had warned them of a penalty for the plan failing ADP testing for three consecutive years. I've not come across this in any of my studies so far, and I cannot find anything about it anywhere - not on ERISApedia, not on tag, google, IRS site, nothing. Now, I know that the layperson generally has no idea what we're talking about when we discuss ADP/ACP testing or coverage or anything else, so the likelihood of the client having misunderstood something that the prior TPA said is certainly present. But have any of you ever come across this? If so, could you point me in the right direction? Thanks!

A participant retired12/31/2013 and was paid 1/2/2014. The participant deferred, matched and received PS on the compensation paid 1/2/2014. The plan uses the standard 415 compensation definition allowing for post-severance compensation paid up to 2 1/2 months after separation from service or the end of the plan year. An argument could be made that they should be included in ADP & ACP testing because their compensation was includible under 415. An argument could be made that they should be excluded from the test based upon them not being an employee in 2014. Would anyone be willing to comment on whether they be included or excluded from the 2014 ADP & ACP testing? They are an HCE and I'm looking for a valid reason to exclude them.

Good morning. I have a plan with 45 HCEs. The plan has immediate entry for 401k. When I test the Otherwise Excludable employees (includes 4 HCEs) separately the test fails. I have 2 questions: 1. Can an HCE be an Otherwise Excludable employee? The McKay Hochman website seems to say No. 2. If HCEs can be an Excludable Employee, do they take a refund, or do I just go with the Non-excludable test, which passes? Thanks in advance!!