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HCE's limited to 4.5% deferral. An HCE that termed deferred 28%. How to correct ADP test?


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Posted

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?

Posted

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.

Posted

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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