FAQ 145: ADP--ATM and catchup calculations

Problem: Participants with the same deferrals, match amounts and compensation are receiving different ATM amounts. Those with catchup receive no ATM, but those without catchup have ATM calculated. What is the order of reduction when an HCE has catchup amounts and ADP excess contributions that generate ATM?

Solution: The examples below show the order of the reductions in the system. Calculate ATM on Catchup Contrib is unchecked: 14000.50 original deferral -1000.50 catchup due to 402(g) excess ------- 13000.00 starting ADP amount -1999.50 catchup due to failed ADP ------- 11000.50 post-catchup ADP -4129.26 ADP excess contribution -------- 6871.24 Deferral "remaining" after adjustments Matched Deferrals: 190798.40 * 6% = 11,447.90 1000.50 Catchup 402g -- unmatched deferral 1999.50 Catchup ADP -- 1552.10 unmatched deferral (13000-11447.90); matched deferral 447.40 4129.26 Excess ADP -- matched deferrals ATM on Excess Contribution (all matched deferral) = 4129.26*25% = 1032.32 ========= If option to Calculate ATM on Catchup Contrib is checked: ATM on Matched Deferrals (ADP catchup and ADP excess) = (447.40 + 4129.26) * 25% = 1144.17 ========== The ADP test will never make any ATM adjustments for 402(g) catchup, but will calc ATM on ADP catchup (if selected) and ATM on Excess ADP Contributions (if selected).