FAQ 399: ADP--Calculating ATM on catchup contributions


Mr. Smith contributed $22,000 in deferrals with a $4,000 catch-up contribution. I've coded this accordingly in the employee record.

The plan fails the ADP test and he gets an ADP refund of $9,238.83, which I agree with. Additionally, the system calculates a forfeited amount of $313.52 attributable to excess match. The plan allows for match on catch-up contributions. When I manually do the ATM calculations, I come up with zero (i.e., there shouldn't be match forfeited). Therefore, why is the system coming up with forfeitures attributable to match of $313.52?


The difference lies in the ADP setup question "Calculate ATM on Catchup Contrib".
If catchups are matched, there is no need to calculate ATM because they are allowed to have match. So, do not check the "Calculate ATM on Catchup Contrib" box. This should be the default setup.

If catchups are not matched, so participants should not get a match on amounts calculated as ADP catchups, this box should be checked. Remember that this catchup ATM selection is separate from the standard ATM selection on the Corrections Setup screen. The ATM selection on the Corrections Setup screen controls the overall calculation of ATM on excess amounts and is checked to calculate by default.

We have had a few clients ask about our terminology. Perhaps we should come up with a better name for the catchup ATM option, but we only have limited space in the window. In this case, if you do not check the "Calculate ATM on Catchup Contrib" box, you should see the results you expect.