Topic Archive: Top Paid Group Election

How Can We Improve ADP/ACP Test Results Without Offering Safe Harbor?

DWC | 06/18/19

Facts

My architectural firm sponsors a 401(k) plan.  We have 38 architects and 2 administrative assistants.  We currently provide a matching contribution to participants and, some years, a profit sharing contribution too.  I’m reluctant to utilize a safe harbor design, because I really value the vesting schedule on our employer contributions to help retain my best talent, but the plan frequently fails ADP and ACP testing.

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Can We Reduce the Number of HCEs in our Plan?

DWC | 01/15/19

Facts

We set up our company 401(k) plan soon after we started our business.  At the time, we were a small tech company with only a couple of employees.  Over the years the company has grown exponentially, and business has been good to us…really good.

Because of this, the demographics of our company have changed completely.  We have too many of our people who are highly compensated employee (HCEs), and it is causing havoc with our nondiscrimination testing.  Last year, some employees had to take corrective distributions of their deferrals due to failing the ADP test for the first time.

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