Recharacterize ADP refunds to after tax contribs

[fiona1]

The ERISA Outline book talks about the ability to recharacterize ADP refunds to after tax contributions. In order to do this, the plan document must allow Employee contributions.

The EOB also says that the recharacterized after-tax money is subject to be tested in the ACP test.

My question has to do with WHICH ACP test this money is tested in.

For example, say a 1/1/06 to 12/31/06 ADP test fails. HC Employee A elects on 2/9/07 to recharacterize all of his $1000.00 ADP refund to an after-tax contribution.

Is that $1000.00 EE contribution then retested in the 12/31/2006 ACP test? Or is it treated as a 2007 plan year contribution and tested in the 12/31/2007 ACP test?

[Tom Poje]

it is 2006 money, so 2006 test

basically you are saying that the ee didn't have pre tax deferrals, you are saying they were after-tax. participant also has to indicate the amount for tax filing. I guess you can use the 1099 for 2006, not sure exactly what code you use.