One to one correction method

[Guest TM3069]

I have a client who failed the ADP test in 2006. The client did not process the corrective distribution. It is now 2008 and the client has chosen the one-to-one method. Question: When posting the contributions to Relius, what year do I post the contributions? 2006 or 2008? How do I get around the 415 Limit for participants who are no longer employed as of the correction date?

Thank you

[fiona1]

You shouldn't have a 415 issue. From the ERISA Outline Book: The one-to-one contribution is treated as an annual addition for §415 purposes for the year of the failure (or for the prior year, in the case of corrective contributions made to a plan that used the prior year testing method for the year of the failure), not for the current year in which the corrective contribution is made. See section 2.01(1)(b)(iv)(B)(1) (last sentence) of Appendix B of the EPCRS Procedure. Thus, the amount of the one-to-one contribution being allocated to an employee must not cause the employee's total annual additions for the year to which the allocation relates to exceed the §415 limit in effect for that year (taking into account that employee's section 415 compensation for that year).