ADP/ACP testing
glen

United States

#1 Oct 27, 2011
In early October 2011 I received a large refund of my 401(k) contributions. I was told by my company’s benefits department that this refund came from my contributions for 2010 because of a failure of the ADP/ACP tests. I was also told I received the refund this year (2011) because I was considered a highly compensated employee (HCE) for 2010.

In 2009, my compensation was greater than the 2009 compensation limit ($110,000). In 2010, my compensation was less than the 2010 compensation limit ($110,000).

My benefits department has not been able to clearly explain to me why I was considered an HCE for 2010 when my compensation that year was less than $110,000.

Can someone help me understand the IRS rules regarding when an employee is considered an HCE for the purpose of ADP/ACP testing? It seems to have worked like this: 2009 – compensation exceeded limit; 2010 – considered an HCE for 2010 because 2009 compensation exceeded limit; ADP/ACP testing for 2010 failed, which means I received a large refund of my 2010 contributions even though my 2010 compensation was less than the limit (and therefore not an HCE).

Tell me when this thread is updated:

Subscribe Now Add to my Tracker

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

401K Discussions

Title Updated Last By Comments
401k info please! Mar '18 Doones 1
Empower 401k after divorce Feb '18 divorceHeadaches 1
News Lives in limbo as workers, residents await casi... (Jun '07) Feb '18 Choking 3
401K for self employed but married filing jointly Feb '18 NewTo401K 1
What happens when you'll retire? Jan '18 remoz 1
401K distributed now former employer wants thei... Nov '17 Distressed 1
401k loan Nov '17 Mama 1