ADP Testing

[Guest perplexedbypensions]

Hello out there. I am working on a plan that has 5 employees. The two HCE's defer and the three NHCE's do not. Are there any exceptions to passing the ADP test if only HCE's defer? I am hoping so.

Thank you!

[stephen]

I hope your plan is a safe harbor plan and the notice was posted timely... because otherwise you'll fail ADP.

[Leopurrd]

if you are NOT a safe harbor plan, you may have a chance to pass on prior year testing. BUT, if that's the case, then next year the HCE's can't defer (except catch up).

[Tom Poje]

if the HCEs are 'over the hill', "graying gracefully" or at least age 50, and the plan allows catch-ups then you could treat up to $5000 as such.

if first year of the plan and prior year tesing is used then you can use 3% for the NHCEs, but that would only work this year.

[Sully]

And don't forget to check the Top Heavy status of the Plan, which could trigger required contributions by the employer.