ADP testing failing - any suggestions?

[Guest terric]

401(k) plan - no match just deferrals, implementing a negative election - 3%. Using top 20% and excluding "otherwise excludable" from ADP test. HCE's do not want to limit their deferrals, a match contribution is not an option and neither is a safe harbor 401k plan.

Anyone have any suggestions or a different 401k plan design that might work?

Thanks.

[JanetM]

There is no plan design the will allow the HCEs to make high deferrals while NHCEs make low deferrals and pass ADP. They either have give NHCEs a safe harbor contribution or do without.

PS it is clients like this that drove me from public accounting in the end.

[Guest terric]

I completely understand - just grasping at straws!

[four01kman]

Look at a nonqualified plan for the very HCEs only. This would solve some problems, but create others.

[Guest Pensions in Paradise]

JanetM said it all. But wait, there is one other option. They could fire all the NHCE. See, there's always an alternative.

[mschwechter]

They don't have to limit their deferrals, they just have to expect a refund

[MR]

They don't have to limit their deferrals, they just have to expect a refund

do the owners have spouses they could put on the payroll? if the plan doesn't have a 1-year wait, they could have spouses earn a minimal amount and defer nothing and still be in the non-excludable test by using the "carve out" rule.