Auto enrollment, withdrawal, ADP and 5500

[Dazednconfused]

Hi,

Question regarding auto enrollments, if participant is auto enrolled and then opts out and receives distribution, I am assuming that they are considered as 'to never have deferred' for ADP purposes, so they are zero for tests?

Also, since it was auto enrolled, then opted out, a contribution will show going into/ out of trust. How is this reflected on the 5500? Do they negate one another and therefore not shown as a contribution or as benefit paid?

Thanks,

Jasofk

[Guest Sieve]

Yes, they would be zeroes for ADP purposes. (The regs specifically exclude the amounts deferred and subsequently returned from being included in the ADP test: Treas. Reg. Section 1.401(k)-2(a)(5)(vi).)

I don't do Forms 5500 (or windows), but this type of withdrawal is a distribution for which a Form 1099-R would have to be issued (using Distribution Code 2--see Instructions), so I would think that the Form 5500 would show the amount both as going in and as coming out (technical terms!!).