Payroll periods crossing over plan years - what to include in each yea

[John A]

If an employee terminates just prior to the end of a plan year but has deferrals taken out of the final paycheck, which is received in the next plan year, how is testing completed? Say the years are calendar year 2001 and 2002. Are the deferrals received in 2002 counted for ADP testing for 2002 even though the employee terminated in 2001? Are the deferrals counted in the 2001 ADP test even though the paycheck was in 2002? Does the answer affect employees who were eligible to defer during the payroll period, terminated in 2001, and did not defer from the final paycheck (which year's ADP test should include them)? Should the 2002 410(B) coverage test include either of these types of employees? Has the IRS ever provided formal or informal guidance on this issue when a payroll period crosses over a plan year end?

[Guest Jim Kais]

I would check to see what you reported for W-2 as a start - 2001 or 2002?