ADP correction using catch up provision

[Guest nps]

I am working with a non-calendar year plan that has failed the APD test. The amount that needs to be refunded to one HCE is over $1,000 (but less than $2,000).

Since the plan year spans 2002/2003, can I recharacterize only $1,000 of his deferrals as catch up (and still have to make a refund)- since that is the limit for 2002, or can I recharacterize up to $2,000 of his deferrals as catch up - since that is the limit for 2003?

[Tom Poje]

In the proposed regs

(I am looking at page 53561 of the Federal Register (vol 66, no 205 dated Tues Oct 23,2001)

timing rules

...a catch up contribution is made as of the last day of the plan year..

since the plan year ends in 2003, then the catch up would use the 2003 limit. looks like that is what you want to hear!

[Guest nps]

Thank you!