OK to shift a percent or two from the ACP test to help pass the ADP test?

[Guest jodisam]

Is it permissible to shift a percent or two from the ACP test to help pass the ADP test? ADP test is as follows: HCE 5.96%; NHCE 3.01%

ACP test is: HCE 1.28%; NHCE 1.03%. Plan uses current year testing method. Document provides for distribution to HCE, QNEC and QMAC, but also discusses multiple use test, which is no longer applicable.

[Blinky the 3-eyed Fish]

To shift from the ACP test to the ADP test, the matching dollars you are shifting need to satisfy the QMAC criteria. Chances are they don't but see your document. Also, you mention that the doc has the MUT language in there. Haven't you adopted an EGTRRA Good Faith Amendment by now that would have removed the MUT test?

That being said you also must consider that your NHCE ACP% is just 1.03%, you aren't going to be able to shift "a percent of two". The most you can shift would be .39%, which would leave the NHCE's ACP% at .64%, which is 1/2 of the HCE's ACP%.

[Guest LJT]

To shift from the ACP test to the ADP test, the matching dollars you are shifting need to satisfy the QMAC criteria. Chances are they don't but see your document. Also, you mention that the doc has the MUT language in there. Haven't you adopted an EGTRRA Good Faith Amendment by now that would have removed the MUT test?

Blinky, do you know if I have to make the ACP percentage that I shift from ACP to ADP 100% vested if it is not a QMAC for the 2008 year only to pass the ADP test? I am shifting one percentage over to ADP to pass. Does this one percentage have to be 100% vested? Can I use this for one year only since the match is not usually a QMAC? any responses will be helpful.