Posts Tagged ‘ADP Test’

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Test – the word alone is enough to make even the most studious among us sweat. 

Now place it in the context of your 401(k) plan, i.e. determining whether your plan passes non-discrimination tests, and anxiety levels can easily go through the roof!

This article will take a brief look at ways to correct a failed Average Deferral Percentage (ADP) test, the non-discrimination test mandated by the Internal Revenue Code to determine whether 401(k) elective deferrals unfairly favor highly-compensated employees as well as how to use corrective distributions, a method available to fix a failed test.  It also outlines a few changes that can be made mid-year to improve test results and explains how to avoid the ADP test altogether. Read the rest of this entry »