Topic Archive: Corrective Refunds

How Are Corrective Refunds Determined for a Failed ADP Test?

DWC | 08/21/18

Facts

Our 401(k) plan failed the ADP test for the first time this year.  We decided to correct the failure by making refunds to the highly compensated employees instead of making additional contributions for the other participants.  However, when we got the actual refund amounts from our TPA, we were surprised to see that those HCEs with the highest deferral percentages are to receive smaller refund amounts.

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