401(k) Corrective Distributions Calculation

[Renafesq]

I have a client who failed the ADP test.  No NHCEs contributed to the plan (the vendor did not disaggregate the client's two plans; one is for NHCEs and the other consists mostly of HCEs).  At any rate, does anyone know how to determine the highest permissible ADP for the HCE group in this instance?  There are only 4 out of 5 HCEs who were contributing to the plan. TIA

[BG5150]

Your compliance software should tell you that all deferrals of the HCEs should be returned.  (If an HCE is at least age 50 in the plan year, you can recharacterize up to $7,500 as catchup and not have to be refunded.)

You cannot 'disaggregate' NHCEs from HCEs.

[Bruce1]

On 12/9/2024 at 8:11 PM, Renafesq said:

At any rate, does anyone know how to determine the highest permissible ADP for the HCE group in this instance?

NHCE 0% -> HCE limited to 0%

NHCE 0-2% -> HCE limited to 2x 

NHCE 2-8% -> HCE limited to 2+

NHCE 10%+ -> HCE limited to 1.25x