ADP and ACP Tests

Question 1

ADP test

Answer 1

(actual deferral percentage)
Measures how much employees contribute to their 401(k) plans. This test compares the average deferral percentage of highly compensated employees (HCEs) to non-highly compensated employees (NHCEs).

Question 2

ACP test

Answer 2

(Actual contribution Percentage)
The ACP test examines employer matching and after-tax contributions.