Other Tests Required for Many 401k Plans

Course Description:

All 401k plans must undergo a series of annual tests. The type of tests required for your plan will partly depend on the features and options outlined in your plan document.

Some tests involve making sure simple limits are not exceeded. Other tests are designed to ensure that (Officers, Directors, Key Employees, etc.) don't receive a majority of the benefits available in the plan: These are tests referred to as Anti-discrimination tests. Officers, Directors and Key employees are referred to as HCEs. Congress defines an HCE as anyone who makes more than $105,000 in 2008 - Please refer to the Statutory Limits Table for more details about annual HCE limits.

Some Anti-discrimination tests attempt to make 401k plans more equitable by placing restrictions on how much an HCE can participate in the plan. These restrictions are generally based on how much non-HCEs are participating in the plan, or on the level of 401k benefits provided to non-HCEs

Learning Objectives:

Upon successful completion of this course, participants will be able to:

• Provide explanation of ADP tests, ACP tests, Coverage tests, and Gateway Minimum tests.
• Perform Top Heavy test, Maximum Deferral Limit test, and Annual Limitations test.