Catchup reclass

[Guest Jeff Weber]

I have an HCE with an ADP failure. He deferred 15,500 and 4,800.00 is being reclassed due to failure. He wants to get a refund? I've never had someone want a refund instead of a reclass. Is this permissible? He feels that since catch up is an option, which he didnt choose, then he should be able to take the refund? I think that if the plan allows catch up, it is mandatory that his failure is reclassed?

[Bird]

He feels that since catch up is an option

There's the flaw in his reasoning. He could argue that it's his option to do catchup if he puts in over $15,500, since one of the things that determines when a contribution is a catchup is exceeding the 402(g) limit. Of course that's an irrevocable option, FWIW.

But if he puts in $15,500, he has no discretion in determining if part of it is catchup or not. The reclassification procedure is formulaic and nowhere does it say you ask the participant for input.

[Guest Jeff Weber]

He feels that since catch up is an option

There's the flaw in his reasoning. He could argue that it's his option to do catchup if he puts in over $15,500, since one of the things that determines when a contribution is a catchup is exceeding the 402(g) limit. Of course that's an irrevocable option, FWIW.

But if he puts in $15,500, he has no discretion in determining if part of it is catchup or not. The reclassification procedure is formulaic and nowhere does it say you ask the participant for input.

Thanks, that's what i thougt too. I cannot find anything that gives the participant the "option" to reclass the failure. I know this is an odd request, but i was just wondering if anyone else ran into it before.