ADP/ACP compensation

[pmacduff]

I have searched the boards as I believe that Tom Poje answered this one at some point in the near past, but I can't seem to find it.

I have a 401(k) plan where the plan doc excludes bonuses from compensation for purposes of 401(k) deferral contributions & nonelective allocations. As far as ADP testing, the doc defines compensation for ADP testing as 414(s) comp.

If I use bonuses in my definition of compensation for ADP testing, the test "fails by less" than if I use the compensation off which deferrals were calculated. It's not a great amount, but enought to reduce the required refunds for the HCEs.

Is this acceptable?

[Tom Poje]

The Corbel documents usually say something like 'any definition that satisfies 414s can be used'

(in fact, if you failed the compensation ratio test, you would have to use total comp for testing even though you used a different definition for allocation purposes.)