ACP testing, prior yr, vesting change from 100%

[Guest noans]

Big plan, prior yr tested, discretionary match, off calendar yr plan. Employer always makes the match. Prior to EGTRRA restatement, match was 100% vested and doc allowed testing with deferrals under ADP Test. With EGTRRA restatement, 3 yr cliff vesting put on match for employees hired after a specific date.

Questions... (1) if I do not have any participants who fall under the new vesting schedule receiving a match, can I continue to test the match with the deferrals under the ADP test? (2) if I have participants who will now have match subject to vesting in the test, do I need to test my match under ACP? I think yes, but everyone or just the vested match? or even if I do not have any non-vested match participants, SHOULD I start testing match under ACP due to EGTRRA restatement?

AND (3) because it's prior yr testing, what would my prior year ACP be? 0%? I cannot use the assumed 3% because this is an ongoing plan who happened to change their match vesting. So the 3%, I feel, would not be able to be used.

ALSO ADP side, I have a participant who was NHCE in prior yr but is HCE for this current yr. I understand that I need to show him twice on the test, as NHCE with his prior yr deferral percentage and as HCE with his current yr deferral percentage. Is this correct? Wonder how I will get Relius to do that!

ANY help, reference material etc etc etc would be most appreciated! I'm going gray thinking about this! Thanks so much!

[Tom Poje]

the more I think about it, the more I say ugh ugh and more ugh or I am simply not understanding your description.

If I understand your description properly.

the plan has always had a match, so that is not a new feature, so I agree you can't use 'first year of match so use 3% for prior year".

the match that has been made has been a QMAC (or at least hope so, that the distribution restriction rules have also been applied otherwise there are other issues) [Just because a match is 100% vested does not make it a QMAC, the distribution rules also apply]

I've never heard of match handled this way with prior year testing, but it would be possible.

on Relius, you run the 2010 val. It stores the NHCE ACP % in plan specs.

when you run the 2011 val it compares the 2011 HCE avg to the 2010 NHCE %.

what would I expect to happen? If you had things coded to use the match in the ADP % last year, then I would expect nothing to show for the ACP % for 2010 for the NHCEs. You would have to rerun last year's test to get this value to store properly. By the way, this would be no different that if you decided you wanted to run testing as (comp - deferrals). you would have to recode plan specs and rerun last year's test.

[Guest noans]

Thanks Tom. That's what I thought that I would need to rerun the prior year's ADP/ACP test to give myself an ACP prior yr percentage. I'll have to reach out to Relius. When the system is coded for match tested with ADP it codes each participant to be excluded from ACP testing. Switching plan specs to test match with ACP doesn't flip that code back. I would have to reverse and repost eligibility. 1500 people, seasonal employees, lots of activity, bound to be some hard coding and overrides that I did. NOT looking forward to this process. Thanks so much for your answer!! I do appreciate.

[Tom Poje]

well, you know total ADP% in 2010. or the grand total pct before dividing by the # of bodies.

I suppose you could reverse the match in 2010

and this would give you total ADP % without match. (and grand total as well)

this might save rerunning eligibility.

at the minimum it would determine a value to use for the ACP %. it might be understated if some people were excluded from the ACP due to hours or last day.

[Guest noans]

That's a great idea! Should have thought of it myself. This isn't the only issue with this plan, so I'm just tearing out my hair and obviously not thinking clearly. No issue with the match...if they deferred...they got match. Thanks!!

[Tom Poje]

well, I am lazy, and if I can avoid running eligibiility on a large plan I try to come up with a way to do.

but don't bother me anymore.

I must to find a way to stop Christmas from coming.

your neighborhood grinch.