Include amounts deferred in excess of plan limitations in the 401(k) t

[Guest Mr. X]

The plan document limits a participants deferral amount to a maximum of 10% of compensation, however, one HCE and one NHCE defer in excess of that amount. When performing the 401(k) test, what amounts would be included in the test? Would you include the amounts in excess of the plan limit, not include or include for one and not the other like a 402(g) violation? Please state any cites to back up your response, or perhaps any opinions from the IRS you have heard.

[R. Butler]

To my knowledge the IRS has not issued guidance on this specific issue. Several attorneys have advised us to treat it similar to 402(g)excess. If the excess from an HCE include it in ADP test; if it is from an NHCE do not include it in ADP test.