ADP & 401(a)(4) testing

[Guest Troy S.]

I am fairly new to x-tested plans, so forgive me if this is a dumb question. : )

Have a client with a Non-SH 401(k) and cross tested PS allocation. They are is looking for options to help them pass their ADP testing in 2008. Is it possible to fail the ADP test, but not need corrections as long as the plan passes 401(a)(4) general non-discrim testing? If so, can you provide a cite?

Thanks!

[Laura Harrington]

Troy, unfortunately that is not an option. See except below from Treas. Reg. 1.401(k)-1(a)(4)(iv)(A):

(iv) Application of nondiscrimination requirements to plan that includes a qualified cash or deferred arrangement—(A) Exclusive means of amounts testing. Elective contributions (including elective contributions that are designated Roth contributions) under a qualified cash or deferred arrangement satisfy the requirements of section 401(a)(4) with respect to amounts if and only if the amount of elective contributions satisfies the nondiscrimination test of section 401(k) under paragraph (b)(1) of this section. See §1.401(a)(4)–1(b)(2)(ii)(B).