ADP Test and Statutory Exclusions

[Guest Richard Scheer]

A 401(k) Plan is effective 1/1/99.

There is no service requirement for eligibility and each employee enters the Plan on the first day of the month following DOH.

The Plan has elected to use actual NHCE ADP for the first year and will use prior years ADP in the future.

In order to pass the tests for 1999, the Plan tests Statutory Exclusions (< 1 YOS) separately.

Question: For 2000, what is the NHCE ADP?

Is it the 1999 ADP for all NHCES or only those who were not excluded?

[MWeddell]

For 2000, use the prior year NHCE percentage computed in the manner that was used for the 1999 test. Because the 1999 test was run excluding those under age 21 and under 1 year of service, one uses that figure (after excluding those employees) in the 2000 test.