Compensation

[justatester]

Hi,

Plan uses prior year testing. In 2014, the ADP/ACP testing compensation was "net" comp for both HCEs & NHCEs. For 2015, the plan wants to use gross compensation for the ADP/ACP test. Is this allowed for plans using prior year testing method?

[Tom Poje]

to be consistent, you have to use the same definition.

the software I use when running the ADP test in 2014 would show the 2014 comp for the NHCEs on the report but the testing would be based on the 2013 values stored in memory because you are using the prior year testing. in other words, the 2014 listing of NHCEs on the ADP test is not used for 2014, but would be used for 2015 if nothing else changed. if you are going to switch to using full comp you have to redo the NHCEs values to determine what to use for the 2015 testing. of course, if you go back to 2014 and rerun things using total comp, you don't rerun the 2014 test because that was completed, but now at least you have the correct values for 2015 testing for the 2014 NHCEs prior results.