ADP Test and Otherwise Excludable

[msmith]

New Employer and new 401(k) Plan for 2017. All NHCE's and HCE's are considered otherwise excludable. Testing software shows the ADP of the otherwise excludable NHCE's as "N/A" and the HCE's as 1.50%. The software says the Plan has passed the ADP - but it just does not look right (maybe it's just me).

Any comments would be appreciated.

 

[Tom Poje]

HCEs can be treated as 'satisfying' the one year wait (1.401(k)-2(a)(iii)(A) [using ADP for all HCEs and all NHCEs disregarding those NHCEs who have not met minimum age and service..], so I could understand it if you mean to say

statutory includable consists of all the HCEs at 1.5%, there are no NHCEs so plan passes

otherwise excludable group consists only of NHCEs so plan this group passes as well.

[msmith]

Thank you, Tom. Most of what I was reading seemed to contradict each other.