A “nonelective contribution” is a contribution to a retirement plan that an employer is required to make on behalf of each eligible employee, regardless of whether the employee makes his or her own contributions to the plan. The contribution may be made to a defined contribution plan, such as a 401(k) plan, or to a … Read more
The Actual Deferral Percentage Test (ADP) is a test used by 401(k) plans to ensure that participants are not disproportionately benefiting from the plan. The test compares the average deferral percentage of highly compensated employees (HCEs) to the average deferral percentage of non-highly compensated employees (NHCEs). If the average deferral percentage of the HCEs is … Read more
