If none of the NHC employees defer does that mean that none of the HC employees can defer? Are they up the creak? 2 x 0% is 0%

Background... Small plan of just HCE participants (no other employees at all). Times are tight.. may only make deferral contribution for 2009. One new employee (bookkeeper) who will be eligible. What is she doesnt defer?

Suggested options? Doing 2009 planning.

I would suggest a safe harbor match - that way it doesnt matter if the NHCE's defer or not - testing would still pass, otherwise the HCE's can not defer over 2% of NHCE's and that would be 0.

Is it too late to do SH for 2009 if the deferral feature has been implemented, I think. When will the bookkeeper be eligible? In 2009?

Does the plan allow for a QNEC? If so, the ER could make a QNEC enough to satisfy the ADP test.

And as for the 2% "limit" mentioned: it is the LESSER of NHCE average PLUS 2% or TIMES 2%. Therefore, it would be zero (0.00 X 2% is always less than x% + 2%)

ASIDE: Someone once put up a rhyme of when you use the 2+, 2x and 1.25x. It turns out you use the 2x when the NHCE % is under 2, you use 2+ when it's between 2 and 8 and 1.25x when it's over 8. )Can anyone find a link to the rhyme? I can find it using search)

Does the plan use current year or prior year testing?

if the HCE is age 50 or older, then you still get the catch-up, so something could be deferred. $5,500 is better than nothing.

no matter which route you choose, be careful if top heavy rules apply.

Are all of the HCEs owners? Or are some HCEs due to compensation only?

If you have some HCEs due to compensation only, using the top-paid group definition of HCEs might help.

I ran the test on this tool just for "fun": http://www.grubercompany.com/pages/hcelimitcalc.asp
It definately comes to 0. That's been pretty clearly established though.
But the catch up contribution is still an option.

Kevin C asked about prior year testing. Perhaps that's another option.

Is an automatic enrollment feature availble to the plan?