A factor used in the testing of 401(k) salary deferral plans to determine whether they exceed the discrimination guidelines set forth in the tax code. 401(k) plans that allow the more highly compensated employees to contribute a higher proportion of their income, including the employer contribution, than the percentage contributed by and on behalf of lower paid employees are deemed to be discriminatory and will be disqualified if not corrected.
Related information about actual deferral percentage (ADP):
- ADP Test (Actual Deferral Percentage Test) | Retirement Dictionary
Mar 20, 2009 ... Definition. A test that must be performed by plan administrators to determine whether salary deferral contributions to a SARSEP or 401(k) plan ...
- Actual Deferral Percentage / Actual Contribution Percentage (ADP ...
The Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests must be passed in order to satisfy the non-discrimination requirements of ...
- What is actual deferral percentage (ADP)? definition and meaning
Definition of actual deferral percentage (ADP): A factor used in the testing of 401( k) salary deferral plans to determine whether they exceed the discrimination ...
- Fixing Common Plan Mistakes - Not Correcting ADP/ACP Mistakes ...
Aug 2, 2012 ... Fixing Common Plan Mistakes - Not Correcting ADP/ACP Mistakes Timely. The Issue. Many of you have 401(k) retirement plans that provide for ...
- EXPLANATION OF COMPLIANCE TESTING - FASCore
Actual Deferral Percentage (ADP) Limit: An Actual Deferral Percentage (ADP) Limit is imposed on 401(k) plans. The Actual. Deferral Ratio (ADR) for a participant ...
- Actual Deferral Percentage Law & Legal Definition
Actual Deferral Percentage (ADP) is an annual test in a 401(k) plan that compares the average salary deferrals of highly compensated employees (HCEs ) to that ...
- IRS Issues Rules for Computing ACP/ADP Using Prior ... - Prudential
plans with an attached VIP that must satisfy the actual deferral percentage (ADP) test and/or the actual contribution percentage (ACP) test each year.
- 401k compliance testing rules
To ensure that a 401k plan conforms to the nondiscrimination requirements, two tests must be performed: the actual deferral percentage (ADP) test, which is ...