Jim Chad Posted November 1, 2024 Posted November 1, 2024 Plan was amended, HCE's limited to 4.5% deferral. An HCE that termed deferred 28%. So ADP test fails. How do I correct? Is there any basis for refunding the one HCE his excess and not count the refund in the ADP test?
Bri Posted November 4, 2024 Posted November 4, 2024 I would think the excess above 4.5% is an operational error and not part of the testing, fixed separately. Then you run the test with actual 4.5% for him and see how the chips fall.
Jim Chad Posted November 5, 2024 Author Posted November 5, 2024 I lean toward this correction. We have no ability to change section 402(g) of the tax code but we can add a new limit that did not exist before. Evidence of this idea is that the Empower correction form has a separate block for Plan imposed limit refunds and a separate block for 402(g) refunds.
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