pmacduff Posted January 24, 2014 Posted January 24, 2014 I apologize if this has been asked, couldn't find it by searching... Auto enroll plan participant opts out within the 90 day window and is refunded her deferrals. End of the year arrives and Employer does a match. If she otherwise meets the criteria for match eligibility, is she entitled to match? I believe the opt out is as though those 401(k) contributions did not exist and think she should not receive match, but the software is "thinking" differently!
Lou S. Posted January 24, 2014 Posted January 24, 2014 My understanding is the same as yours. They are treated as not having been made; so not in ADP test; not eligible for match.
rcline46 Posted January 24, 2014 Posted January 24, 2014 You should have 'reversed' the deferrals in the RK system as they will not enter into the ADP testing.
pmacduff Posted January 24, 2014 Author Posted January 24, 2014 This is a large plan with an annual 5500 audit and the auditors want to balance to the W-2 reporting. The deferrals show on the W-2 and then the participant receives a 1099-R form from the vendor. I code the participant to be excluded from the ADP testing but neglected to override the match calculation and wanted to be sure that my thinking was correct.
BG5150 Posted January 27, 2014 Posted January 27, 2014 Why would this person be excluded from the ADP test? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
pmacduff Posted January 29, 2014 Author Posted January 29, 2014 BG5150 - I found this but can't find the statement I underlined below in the Fix-It Guide. I'm going to go to the guide again later and try to find it. 401(k) Plan Fix-It Guide - 401(k) Plan - Overview - Internal Revenue ... www.irs.gov/.../401(k)-Plan-Fix-It-Guide--... Internal Revenue Service Jan 22, 2014 - Any withdrawn amounts aren't considered in the ADP test and any ...Plans with the automatic enrollment feature must take steps to ensure that ... the employee's right to opt out and not have elective contributions made or ...
BG5150 Posted January 29, 2014 Posted January 29, 2014 True, the DEFERRALS are not included in the ADP test, but the PARTICIPANT is not excluded entirely. They are in the test as 0% ADR. (Same thing with ACP test: in there, but as a zero (if there were no other allocation conditions)) QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
pmacduff Posted January 29, 2014 Author Posted January 29, 2014 yes - my bad with the description, eh? The contributions are not tested but the participant is in the tests at $0.00 and 0%. just tired already I guess......
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