Catch-Up Contributions In A Failed ADP Test

[Guest ChopperPilot]

We're in the process of correcting a failed ADP test. Our client's 401(k) plan has two young HCEs plus one older HCE, age 54. Our system has calculated corrective distributions to the two young HCEs only. The older HCE deferred $1,511. Can we treat any of, or possibly the entire $1,511 as a catch-up contribution? Thanx.

[Guest mkimball]

It doesn't sound like the 54 year old exceeded a plan limit or a statutory limit. Since the correction of the failed test involve a corrective distribution to the 2 younger HCEs and not the 54 year old, then his 1511 is a regular deferral and no catch up. If on the otherhand, all the HCEs show up with corrective distributions, then the 54 year old's distribution could be characterized as a catch up, so his corrective distribution would end up "net" of the catch up deferral.