402(g) excess included in 415?

We have someone who deferred 26,000 in 2018.  Obvious 402(g) excess.

But do I include the $1500 excess amount in 415?  In other words, what is the maximum PS:  $35,000 (incl excess in 415) or $36,500 (do not include it if it is distributed)?

I believe it is counted, but I cannot look it up in the EOB at the moment.

maybe this

My next question:

I know the excess deferrals are included for HCEs but not NHCEs in the ADP test. 

But what about the Average Benefits Test?

On 1/29/2019 at 1:19 PM, BG5150 said:

My next question:

I know the excess deferrals are included for HCEs but not NHCEs in the ADP test. 

But what about the Average Benefits Test?

??

I don't know if there's a definitive answer on that. But EOB (Chapter 8, Section V, Part C) says:

Quote

2.i.2) Corrective distributions of excess deferrals under IRC §402(g). Whether to apply the rule described in 2.i.1) to excess deferrals under IRC §402(g) is less clear. Treas. Reg. §1.415(c)-1(b)(2)(ii)(D) provides that excess deferrals which are distributed by the April 15^th deadline under IRC §402(g)(2) are not treated as annual additions for §415 purposes. However, Treas. Reg. §1.402(g)-1(e)(1)(ii) provides that the excess deferrals of nonhighly compensated employees(NHCs) are excluded from the nondiscrimination test (i.e., the ADP test) under §401(k), but the excess deferrals of the highly compensated employees (HCEs) are included in the ADP test. With the difference in treatment between HCEs and NHCs for nondiscrimination testing purposes, it is recommended that excess deferrals made by HCEs be included in the benefit percentage, even if they are distributed by the April 15^th deadline.

It seems like including them would be erring on the side of caution here.