A-B-C
This test compares the average salary deferrals of HCEs and NHCEs
What is the Actual Deferral Percentage test (ADP)?
The company or organization that establishes and maintains the retirement plan for its employees.
Who is the Plan Sponsor?
This test ensures that the plan benefits a sufficient percentage of NHCEs, not just the HCEs.
What is the Coverage test?
The most common way to fix a failed ADP test, where money is returned to HCEs to lower their group's average.
What are corrective distributions (or refunds)?
This code represents the annual limit on an individual's total salary deferrals to 401(k) and 403(b) plans ($23,500 in 2025).
What is the 402(g) limit?
This test compares the average employer match and after-tax contributions of HCEs and NHCEs.
What is the Actual Contribution Percentage (ACP) test?
The fiduciary responsible for holding the plan's assets in trust for the participants.
Who is the Plan Trustee?
A plan design that automatically passes the ADP and ACP tests, often by committing to a 3% employer contribution.
What is a Safe Harbor plan?
An employer contribution made after the year-end to "boost" the NHCE average and pass the ADP test.
What is a QNEC (Qualified Non-Elective Contribution)?
This type of organization is typically the only one eligible to sponsor a 403(b) plan.
Answer: What is a public school or a 501(c)(3) tax-exempt organization?
This is the acronym for the group whose deferral contributions are restricted by testing.
What is an HCE?
A participant who is age 50 or older by the end of the year, allowing them to make extra salary deferrals.
Who is a "Catch-Up Eligible" participant?
To pass the ADP test, the HCE average percentage generally cannot exceed the NHCE average by more than this.
What is 2%
If corrective distributions for Non-EACA are not made within this timeframe after the plan year-end, the employer faces a 10% excise tax.
What is 2.5 months?
This code represents the total limit on all contributions (employee + employer) to a single employee's account in one year ($70,000 in 2025).
What is the 415 limit?
This acronym stands for the other group in testing who are not considered highly paid.
What is an NHCE?
This type of employee, defined for Top-Heavy testing, includes certain officers and specific levels of owners (e.g., >5% owners).
Who is a Key Employee?
This test, also known as the "General Test," ensures the amounts of contributions are not discriminatory.
What is the Nondiscrimination test under IRC ยง 401(a)(4)?
The minimum contribution amount an employer must make for all non-key employees if the plan is Top-Heavy.
What is 3%?
Unlike 401(k)s, 403(b) plans are not subject to what tests?
What are ADP and Top Heavy tests?
This rule for 403(b) plans requires that all eligible employees have the opportunity to make deferrals.
What is the Universal Availability rule?
The person or entity, named in the plan document, with the discretionary authority to manage the plan's daily operation and compliance.
Who is the Plan Administrator?
If a plan fails the main coverage test (the Ratio Percentage Test), it can still pass by satisfying this more complex, two-part test.
What is the Average Benefit Test?
This broad IRS program allows employers to correct testing failures and other plan errors, often to avoid plan disqualification.
What is EPCRS (Employee Plans Compliance Resolution System)?
This is the deadline for processing corrective distributions for a failed ADP/ACP test for an EACA plan to avoid the 10% excise tax.
What is 6 months after the plan year-end?