HCE, Catch-Ups and Off-Calendar

[austin3515]

Got a plan with just one HCE. Plan is a 6/30 year end. For the Plan Year 6/30/2010, the ADP test is failing. The HCE will be age 50 in December 2010. He did not defer more than 16,500 in the first 6 months of 2010 (but of course he could have!).

Can he have his deferrals reclassed as catch-up contribtions? I believe the answer should be yes, but please confirm!

[Lou S.]

Off calendar year 401(k) plans bite, largerly for this reason and when you get some HCE who doubles up the 402(g) limit in a single plan year and really blows the test. That said, generally speaking yes you can recharaterize. The rules are written though that what gets recharaterized in pye 6/30/xx isn't available as cacthup in pye 6/30/xx+1 so sometimes you just wind up pushing the problem a year out.

[austin3515]

OIn that insnane calcualtion I'm pretty well versed, and have a template that "knows the rules," but thank you for point that out!