| FAQ 331: ADP--Excluding employees from ACP but keep them for ADP |
I am having a problem with employees who are excluded from the employer contribution portions of the plan I am working on. This plan excludes a certain class of employee from participating in the employer matching contribution portion of the plan, but allows them to participate in the 401(k) portion.
I have given these employees an "A" for their primary status code and an "E" for the secondary and tertiary status codes. However, when I ran the ADP/ACP test, I noticed they were still being included in the ACP test. I then gave each of these employees a future entry date of 1/1/06 and re-ran the tests, with the same result.
Is there another way to exclude these employees from the ACP test, but keep them for ADP?
You were on the right track, you just forgot to make the corresponding change in the plan specs. Changing their secondary status code to an "E" should work, but you need to also code in the specs that the secondary eligibility applies to the matching source. If you go to the Secondary Eligibility screen in the specs, check the box next to the matching source under "Use Secondary Eligibility", and then save the specs and re-run your test, you should then see "N/A" on the ACP test for those employees with a secondary eligibility code of "E".