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All sessions will be recorded and available for purchase. Due to the inability to track attendance, however, a Letter of Participation is not provided for recorded events.
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Fundamentals 03: 401(k) Testing: ADP and ACP tests, Catch-up Contributions and 401(k) Safe Harbor Plans
Every 401(k) plan must test for nondiscrimination annually, whether it’s a small or large plan or maintained by a tax-exempt or for-profit employer. To test for nondiscrimination, the Code requires a 401(k) plan to test deferrals under the actual deferral percentage test (ADP) and matching contributions, if any, under the actual contribution percentage test (ACP). This program focuses on both ADP and ACP testing and correcting their failures, including by catch-up recharacterization.
A recent IRS survey claimed 43% of 401(k) plans are safe harbor plans. Safe harbor plans, if operated properly, are exempt from the ADP and ACP tests, and may be exempt from top-heavy testing. Their design is extremely popular. The speaker discusses the conditions and benefits of a safe harbor 401(k) design.
Those new to the business will find this program a great way to understand 401(k) testing and safe harbor designs. Experienced practitioners will appreciate the review of these important topics.
401(k) Testing and Catch-up Topics include: | Safe Harbor Topics include: |
ADP testing fundamentals | ADP vs. ACP safe harbors |
Testing methods | Nonelective safe harbor |
Corrective distributions | Matching safe harbor |
Leveling system | Safe harbor notice requirements |
Correction deadlines | Safe harbor 12-month plan year requirement |
Recharacterize as catch-up | Top-heavy exemption |
Catch-up eligible employees | |
Catch-up contributions | |
402(g) vs. 401(a)(30) |
Prerequisites: There are no prerequisites or advance preparation for this presentation.
Level: Beginning
Instructional Delivery Method
Group - Internet-Based
Speaker – Kevin L. Burch, J.D., LL.M.
Objectives: After attending this Web seminar, an attendee should be able to do the following for each topic:
401(k) Testing and Catch-up Objectives | Safe Harbor Objectives |
Administer the ADP test | Design a safe harbor nonelective plan |
Administer the ACP test | Design a safe harbor matching plan |
Understand prior year testing and current year testing | Understand the benefits of the ADP and ACP safe harbors |
Correct an ADP failure by distributing the excess | Determine when a safe harbor plan is exempt |
Hardware System Requirements:
Software Requirements:
Program related requests, questions, or concerns may be emailed to: relius.education@sungard.com.