SARSEP.....excess ADP contributions.

[Lori H]

a SARSEP fails adp test, are refunds to HCE's determined using same method as a 401(k)? First step, you reduce each HCE ADP until it passes the 1.25 spread of NHCE starting with HCE with the highest ADP, then determine excess contribution then allocate excess first to the HCE with the highest deferral amount and reduce down accordingly?

[Guest KVAlbert]

There is no averaging for the HCE's in a SARSEP. Any HCE that exceeded 1.25 times the average of the NHCE's must receive a refund of the excess plus earnings.

Karl

[Lori H]

so if the HCE ADP can not exceed 2.00% for example, all HCE deferrals above 2% get refunded for each HCE? There is no overall average ADP for the HCE group? The refund could be considered Catch Up if over 50, correct?