ADP/ACP Annual non-discrimination tests for 401(k) plans are mandated by the IRS to ensure that a plan does not unduly benefit owners and highly compensated employees at the expense of other employees.
Each year the IRS releases updated limits for retirement plans. It is important to provide your participants with these updated IRS limits annually.
When undergoing annual reviews, certain non-discrimination testing requires employees to be categorized whether they are HCE/Key Employees. This lesson will help you understand how each category of employee is defined.
When a plan runs on an off calendar year cycle, the complexity of administration, testing and reporting increases dramatically which could translate to additional compliance/administration issues.