FAQ 130: ADP--Earnings showing as zero and how ADP earnings are calculated


I have input the earnings on the system, they show in the transaction screen as processed. When I run the ADP/ACP test and print the results it does not show the earnings on the results. On the ADP test corrective distribution report under earnings it shows 0.00. What am I missing?


After reviewing the plan, I noticed the following.

There are no earnings processed into the HCE's record. When I look at the transactions, it appears that the earnings are coded as transactions going to fund 1, but his money is all in fund 3. If you have already processed transactions, unprocess them, then edit the transactions to have the earnings go to fund 3, and re-process them. Once earnings show up on the fund, the ADP test should reflect earnings on the returned monies.

Do you have other account data in the plan besides earnings? Here is how the system calculates earnings on ADP and ACP returns:

The calculation is done by source, then broken down by fund.

Total Excess Contribution Interest = Excess Contribution Plan Year Interest + Gap Period Interest

Excess Contribution Plan Year Interest =
[(Excess Contribution*Plan Year Interest) / (Ending Balance-Plan Year Interest)]

The denominator in the above can have withdrawals added back, if the user de-selects the ADP setup question "Include Withdrawal in Interest Calculation".