K refunds-how to handle for ABPT?

[AndyH]

How are timely 401(k) refunds treated under the Average Benefits Percentage Test component of the 401(a)(4) test? I have one with refunds under the ADP test and the 402(g) limits. I think the last time I looked this up the answer was "unclear".

Opinions? Thanks.

[Mike Preston]

Since ADP refunds are by nature being made to HCE's, and since they are treated as annual additions under 415, I would think that in the absence of a clear cite that excludes them one should include them. I haven't had to grapple with this issue for a while, so I don't know off the top of my head whether there is s clear cite.

This is another reason why plans that have internal fail safe provisions for 401(a)(4) testing are more difficult to administer.

Same goes in reverse, by the way.

If you have an NHCE with a 402(g) refund, that amount is not included as an annual addition, so I wouldn't think that would be included. Same comment as to fail safe.

[AndyH]

Many thanks again Mike.