Topic Archive: ADP Test

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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Decoding the Alphabet Soup: What's With All the Acronyms? | Part 1

DWC | 07/24/18

Facts

People in the retirement plan business sure do like their acronyms.  All these letters get thrown around, and I do not know what half of them mean.

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What Is the Deadline to Correct a Failed ADP/ACP Test?

DWC | 04/24/18

Facts

Every couple of years, our 401(k) plan fails the ADP/ACP test by a small margin. Since we don’t always fail the test, gathering our year-end census information to send to our TPA sometimes isn’t as high a priority as some of the other projects necessary to close out the year.

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When Can We Change Our ADP/ACP Testing Method?

DWC | 10/10/17

Facts

We have a 401(k) plan that allows for both employee deferrals and a company match. Our annual testing each year is based on the amounts contributed in the previous year. That has allowed us to notify our highly compensated employees of the maximum they can contribute each year to ensure we pass testing.

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