ACP - Using Prior Year Testing when Current Year Discretionary Match P

[Guest cleto]

Is it acceptable to use prior year in order to pass acp when the prior year discretionary match was 50% and the current year discretionary match is 25%?

[KJohnson]

Yes, but just wait till next year when you put it back up to 50%.

Prior year testing + a discretionary match that varies from year to year=trouble sometime down the road.

[Guest SPOT]

What do you do when the document says to use prior year testing for ACP and there wasn't a match in the prior year?

[KJohnson]

You have a big "0"for your NHCE ACP and then refund/forfeit accordingly for HCEs.

If you already have your GUST restatement I would think you are stuck. Otherwise, you have some flexibility with curent year/prior year testing during the remedial amendment period.

Also, if this is the first year of the Plan, you should check your document to see if you have the first year "deemed" 3% ACP rule for NHCEs.

[Guest SPOT]

So if you have a plan that has a discretionary match and the er doesn't match every year, current year testing would be more appropriate right? The plan already has the GUST restatement. I guess this wasn't thought out to well.

[KJohnson]

Yes,

If you have a discretionary match, I would always use current year testing.