2001 ADP/ACP test

[fiona1]

Here is an odd situation - but was hoping for some opinions....

Plan sponsor forgot to do their 2001 ADP/ACP testing. They are currently doing it now.

When the plan document was signed for GUST, the prior year testing method was chosen. The GUST document was signed in 2002.

In doing the 2001 ADP/ACP testing, are they limited to using the prior year method (since that's what the plan document indicates)? Or, can they use the current year method since 2001 was during the GUST remedial period?

I suppose this is an interpretation issue - as I can see it both ways.

Any opinions?

[Guest Pensions in Paradise]

IMHO they must use the method stated in the document. The GUST remedial amendment period has ended, so they can no longer change the testing method. Forgeting to run the ADP/ACP test doesn't give them a special extended amendment period.

[stephen]

My suggestion is to test based on prior year. If it passes you are done as this follows the plan document.

If it fails see if it passes using current year testing (or at least passes better) and check with the companies ERISA attorney to see if they support the idea to switch to current year for 2001.