Failed ADP test with de minimus match forfeiture

[bevfair]

Calendar year plan with current year testing. Recharacterization of refund as catch-up gets us a pass on the ADP test but requires a $0.05 match forfeiture for 2 HCEs. Do these forfeitures really need to be done or can we consider it de minimus since the ACP test passes with them included?

[Lou S.]

Does the plan specifically NOT match on catchups?

If the ACP passes and there are no ADP refunds becuase of recharaterization, what exactly is there to forfeit?

If you do deterime though that the forfeituires are required, I am unaware of any de minimum rule that would allow you to not forfiet.

[Tom Poje]

I'll assume you mean the ACP test fails and the people are not vested????

technically there is no di minimums amount, but if a tree falls in the forest and no one is around does it make a noise? in other words, who is going to notice.

a female once told me I misunderstood the expression, its more correct to say if a man walks in a forest all by himself, is he still wrong.

if the testing is that close, I'd be surprised if tesing using a definition of comp - deferral or, now that the ADP test passes, possibly shifting deferrals to the ACP test might be enough to pass ACP.

(e.g. suppose I shift 50 cents from one NHCE to the ACP test and his ADP % stays the same, but the ACP % increases by .01%.

[bevfair]

It is the ADP test. The testing software indicates that I have match on the excess contribution of $0.05 for 2 HCEs that may need to be forfeited in order to avoid a discriminatory rate of match. It makes no sense to me.

[Tom Poje]

if catch ups are matched then there is no rate of match issue. (If using Relius I believe there is a check box for matching catch ups.)

even if catch up are not matched, I'd be willing to bet that if you treated 10 cents less in deferral as catch up the message would go away (assuming you are under the deferral plan limit.)