| FAQ 305: ADP--Disaggregation-Changing an ineligible HCE to be in the ineligible test |
I have a plan that I can disaggregate that has an HCE that did not meet the 1 year of service criteria but is an owner's son. This HCE happens to blow the whole test by deferring 25% of his miniscule pay. Does the software still support doing two separate ADP tests for those over 1 year of service and those under with the HCE in the second test? I know that we have been running your default which appears to be the newer rule that all of the HCEs are in one test and the second test is no longer required.
Although this is not our primary methodology, it can still be done by separating the groups by location. You can put those <21, 1 year in a separate location (e.g. loc 2), leaving those >21, 1 year in location 1. You can then run the ADP tests separately by location.