401(k) Deferral Refund & ABT

[Penman2006]

I am doing DB/DC combined plan testing for a plan that had to refund part of the 401(k) deferral for an HCE in order to pass the ADP test. I just want to verify that the amount of the deferral that I include for the average benefits test is the net amount, in other words, the deferral amount after reduction for the refund, is that correct?

[AndyH]

I would include it. I posted the same question a few years ago and the responses if I recall correctly were to take the safe route and include it (use the gross amount). Unless of course it changes the result.

Maybe Tom would have a more "correct" answer but I think he is singing for the next couple of days in DC.

[Penman2006]

Thanks Andy.

[Tom Poje]

a guy can't take a few days 'off' (HA!) without Andy throwing his name into the mix.

that is my understanding of the rules. you would still include the 'distributed' deferrals for purposes of the avg benefit % test. they were included in the ADP nondiscrim test, so they would be included in the avg ben % nondiscrim test.

the exception would be if they were treated as a 'catch-up', but since you indicated there was a distribution, that would not be the case.