50% Owner only employee with deferrals.

[Guest Donna Henderson]

I have a PEO who has a participating employer, who is a 50% owner AND is the only employee who actually deferred dollars for the year. (Plan was offered to all and there are other ee's eliglbe but all elected out) Is there anyway possible for employer to pass ADP/ACP putting in the maximum $10,500?? The plan document was not amended for safe harbor.

Help!!!!

[Guest mo again]

I think the alternate limit is the lesser of NHCE + 2%, or NHCE x 2. So 0% for NHCE's produces 0% for HCE's. I am not an expert on multiple employer plans, but you may also have a top heavy issue to deal with.

[Guest]

life is rough, isn't it. Multiple use won't even come into play, as it doesn't sound as if there is a match. even if there was, as Mo pointed out, 0 times anything = 0.

RCK: when testing, if the NHCE average is less than 2 you multiply by 2, you only add 2 if the average is greater than 2.

If there is a top heavy issue then

Can you say QNEC? that will cover top heavy and be used in the ADP test, so that might work. But if the document is standardized, then I think the HCEs also get, so that won't help.

Is it the first year with immediate eligibility? Then with statutory exclusions you would have only the HCE (all HCEs are treated as having met 1 year wait automatically) in the test and you get lucky cause you pass.

but that doesn't solve next year, does it? (Unless the NHCEs start deferring)