Catch-up Order - Excess Annual Addition

[KCA]

A participant who is catch-up eligible and is an HCE by means of attribution has compensation of $30,000. If she defers $15,600 and receives a profit sharing contribution of $20,400 she will exceed her IRC 415© limit by $6,000. Can I treat the $6,000 as a catch-up contribution and only include $9,600 in the ADP testing or must I run the ADP test first using the entire $15,600?

In other words, is there an order by which a catch-up contribution must be determined if the deferrals do not exceed the 402(g) limit?

In this example, her deferrals in excess of $9,600 would cause a failure of the ADP test requiring corrective distributions to participants who deferred $18K.

[Tom Poje]

1.401(k)-2(a)(5)(iii) says elective contributions that are treated as catch up contributions under section 414(v) because they exceed a statutory limit or employer provided limit are not taken into account...

since 415 is one of the statutory limits, it is, as far as I know, the general consensus, that if the 415 limit exceeded, deferrals greater than this limit are treated as catch up contributions and therefore not included in the initial ADP test

[KCA]

Thanks Tom, that's the answer I was looking for!

[Becky Schwing]

Thus it is okay to have a total $36,000 contribution on only $30,000 in annual compensation as long as you are classifying $6000 of that $36000 as catch-up?

[John Feldt ERPA CPC QPA]

34 minutes ago, Becky Schwing said:

Thus it is okay to have a total $36,000 contribution on only $30,000 in annual compensation as long as you are classifying $6000 of that $36000 as catch-up?

Yes, that does not violate the 415 limit. The over 50% PS allocation and nondiscrimination testing is a separate issue.