Prior Year ACP testing but no match made in prior year

[Lori Foresz]

Hi,

I rarely have plans that use the prior year testing method so I want to confirm that is there was NO match made in the prior year, all match amounts for the current year must be returned to HCES? Seems like a faulty document design. Can anyone confirm? Thanks so much

[Leopurrd]

you are correct. you could always switch to current year if adp would not fail that way?

also, as an fyi - when using prior year you should never set up a disc match until the year they want to use it - this way the "new plan rule" (not sure of the actual name) can be used for the acp test and the hce's can get up to an average of 5%.

Vicki

[Lori Foresz]

Excellent point on the first year rule.

Does anyone know if the final 401(k) regs address when changes to testing methods can be made or is this still subject to many differences of opinion.

Help!!

Thanks

[MWeddell]

lgolden,

The final 401(k) regulations didn't clarify the timing of adopting an amendment to switch the ADP testing method from prior year to current year or, when permitted, vice versa.

[wmyer]

Can we use the concept of shifting here to shift some of the NHCE deferrals from the prior year ADP test to the ACP test?