shifting and catch up contributions

[Tom Poje]

ok geniuses

have a plan with the following results:

HCE 4.11 2.06

NHCE 2.17 .70

so plan passes ADP and fails ACP

if I shift .33 NHCE deferral to ACP I have

HCE 4.11 2.06

NHCE 1.84 1.03

Now plan fails ADP and passes ACP.

Am I now allowed to treat part of the HCE deferrals as catch up (where before the shift I couldn't)?

[rcline46]

I don't think so because one of the requirements is that the ADP test passes before and after the shift. It does not pass after the shift unless you do something else.

And these regs predate current/prior testing, catchups and other good stuff.

WHat is you opinion on using the technique with prior year testing?

[Tom Poje]

too aggresive for you, huh?

I did find in the ERISA Outline Book (after I posted my question)

where it says ADP test must be satisfied before and after shift. but that is common knowledge.

but then there is also a statement (11.178 of 2003 edition)

"All testing must be completed, including the shifting of elective deferrals if desired, before determining whether there are any remaining excess contributions that would be distributable under IRC 401(k)(8)© but are eligible for recharacterization as catch-up contributions."

based on that statement, it would indeed seem possible to 'overshift' to pass the match- and then determine if there are excess contributions.