Jhagan
May 30 1999, 12:23 PM
What is the ADP for the HC gropu for 12/31/97?
-ER makes a QNEX totalling 3% of eligible comp to all eligible ee's including HCE, to satisfy the top-heavy minimum required contribution.
-ER Makes no other nonelective contributions
-Plan does not allow employee after-tax contributions
-Gross comp is used for testing
-All NHCE are nonkey
Part, deferrals, Comp
A, 9500, 200000
B, 0, 130000
C, 4000, 80000
Answer is 6.65 Help
Alan Simpson
Jun 1 1999, 07:04 PM
The answer is as follows:
Participant A:
Deferral of $9,500, QNEC of $4,800 (eligible comp of $160,000 * 3%) give an ADP of 8.9375%
Participant B:
Deferral of $0, QNEC of $3,900 (eligible comp of $130,000 * 3%) gives and ADP of 3.000%
Participant C:
Deferal of $4,000, QNEC of $2,400 (eligible comp of $80,000 * 3%) gives and ADP of 8.0000%
SUM of HCE ADP percentages (8.9375 + 3.0000 + 8.0000)= 19.9375%. Divide this by the number of HCE's (3) and the answer is 6.6458% rounded to 6.65%