Excess deferral between two plans unrelated employer, how does this ef

[Guest Kevin Plymyer]

The situation is as follows: Participant has exceeded the 402(g) limit in two unrelated employers' plan. The NHC participant has requested the refund from his current employers' plan. Based on the research I have done - "if a non-highly compensated employee makes elective deferrals in excess of the annual cap to one or more plans of the same employer, then the excess deferrals are not taken into account in calculating that NHCE's actual deferral ratio". Does this hold true for plans of different employers? Any guidance would be appreciated.

[Richard Anderson]

"if a non-highly compensated employee makes elective deferrals in excess of the annual cap to one or more plans of the same employer, then the excess deferrals are not taken into account in calculating that NHCE's actual deferral ratio".

Where did this quote come from?

[Guest Kevin Plymyer]

The 401(k) Answer Book 2000 Edition Q 8:12, page 8-6.

[Alf]

Yes. Excess deferrals are not included in the tests. First, the plan without the excess just tests the contributions made to that plan and the compensation paid by that employer. The plan with the excess deferral just tests the contributions that are not in excess of the limit and the compensation paid by that employer. There is not the same issue as there is with two plans and one employer, but the result is the same.

[RCK]

I would assume that in this case the participant is solely responsible for determining that there was an excess, deciding which plan to take the refund from, and proving tehre was an excess to the administrator when requesting the refund. Since we went to 90 day eligibility, we have been warning people about the issue. But we have nto had a participant initiate a refund yet.

rck

[Richard Anderson]

I think that if neither plan refunded any deferrals to the participant, then both plans would include all deferrals make to their respective plan in the ADP test. If one of the plans makes refunds at the participant's request, then that plan would not include the refunds in the ADP test.