Exclude from ACP

[Guest m thom]

Never mind....I think I figured it out. Compensation had not yet been entered for those individuals, so the system figured they weren't employed that year.

[Guest m thom]

I am running ADP/ACP testing and find that certain participants have been omitted from the ACP. For some reason, eligibility has decided to check the "exclude from ACP" box in Status and Service. Can anyone explain what is going on here? BTW, none of the affected participants had any deferrals for the year.

[Tom Poje]

hmmmmm, I didn't think comp had anything to do with it.

Exclude from ACP test should work as follows:

Is ee eligible for a match?

If no, the system checks the box.

for example, if plan had last day provision, and ee quit, the box would be checked.

if there is an hours requirement, and ee fails # of hours, box would be checked.

if there is a match waiting period (immediate entry for deferral but 12 month wait for match) if ee fails the wait, box would be checked.

An ee who does not defer is correctly treated as deferring at 0% with a match at 0% (rather than excludable)

If there is another reason why the box got checked, I wouldbe curious to know.

What do these people show on the 410(B) nondiscrim test for 401(m)?

I know you said never mind, but you might be indicating there is a potential problem out there.

By the way, there is a box 'plan allows post tax contributions' in plan specs. the default is to have the box checked.

If no after tax contributions are allowed, you MUST uncheck this item!

[Sue H]

If "compensation" includes hours, it does matter--if the match has an hours requirement Eligible for Match would be No, so Exclude from ACP would be Yes.

Just a clarification!

[Tom Poje]

which returns us to the statement made:

"compensation wasn't entered so system figured ee wasn't employed for the year."

But the system doesn't look at that. It looks at hours, or termination, or service.

I would argue if ee has hours and no comp, then it is probably owner trying to hide income from the gov't.

But if you run ee with 0 comp but enough hours, the box 'exclude from ACP test' will not be checked. hence, my concern, what else was coded, since compensation doesn't trigger this item.