Catch-ups in ADP test

[Guest IluvNewComp]

Brain cramp: too much painting, yard work and running around with the kids this weekend....

I have two people over 50 who put away $20,500 (calendar year plan)); one is an HCE, the other isn't.

Can I use $15,500 for the HCE and the full $20,500 for the NHCE in the ADP test?

[Laura Harrington]

Brain cramp: too much painting, yard work and running around with the kids this weekend....

I have two people over 50 who put away $20,500 (calendar year plan)); one is an HCE, the other isn't.

Can I use $15,500 for the HCE and the full $20,500 for the NHCE in the ADP test?

Catch-up is treated the same for both HCEs and NHCEs. You will use $15,500 for both.

[Guest IluvNewComp]

What if it was an off-calendar year plan, and the two people put in $20,500 in for 2007 & 2008 (no 402(g) excesses) for a total of 41,000 each. Do I have to take $10,000 out for each?

[Laura Harrington]

What if it was an off-calendar year plan, and the two people put in $20,500 in for 2007 & 2008 (no 402(g) excesses) for a total of 41,000 each. Do I have to take $10,000 out for each?

I guess I should not have assumed this was a calendar year plan! If this is a calendar year plan than my answer stands.

IluvNewComp: in your example did the two people put in the $41,000 all during the same plan year (e.g. 7/1/2007-6/30/2008)?

[Guest IluvNewComp]

We figured it all out. $5,000 from 2006 was used in the 06-07 test and $5000 from 07 was used in the 07-08 test.

(BTW: in my original post, I was using a calendar year example, so your assumption wasn't wrong)

[austin3515]

Word of caution: Do NOT underestimate how incredibly complicated it is to apply the catch-up rules to an off-calendar year plan, PARTICULARLY if you consumed some catch-ups to reduce an ADP refund.

If you're response to reading this is "what's so complicated about it??" then you need to do some research!!