ADP/ACP test calculator for a quick screen.
Screen a plan's ADP and ACP tests from group averages. Enter the average deferral percentage and average contribution percentage for highly compensated employees (HCEs) and non-highly compensated employees (NHCEs). The estimator shows the maximum HCE average the basic test allows and whether each test passes.
Illustrative estimates only. Results do not determine eligibility, legal compliance, tax treatment or required corrective action.
ADP/ACP preliminary test estimator
Enter the average HCE and NHCE percentages from your preliminary data set to screen the ADP and ACP tests.
Uses the basic test: the HCE average may not exceed the greater of 1.25× the NHCE average, or the lesser of 2× the NHCE average and the NHCE average plus 2 percentage points. It does not determine which alternative applies, perform participant-level calculations, apply permitted testing methods, or model all statutory exceptions.
Preliminary averages-only screen. Validate with participant-level data and current testing rules.
The math behind the result
Basic limit
The HCE average may not exceed the greater of 1.25× the NHCE average, or the lesser of 2× the NHCE average and the NHCE average plus 2 percentage points.
Example
With an NHCE average of 3%, the limit is the greater of 3.75% and the lesser of 6% and 5%, so the HCE average can be up to 5%.
Result
Each test passes when the entered HCE average is at or below its modeled limit.
Good uses
- A mid-year check to see whether a plan is trending toward a failed test
- Explaining to a sponsor how much room HCEs have based on NHCE participation
- Deciding whether a plan design change, such as safe harbor, is worth discussing
What it does not do
- Averages only: real testing is calculated participant by participant
- It does not choose between current-year and prior-year testing or apply permitted disaggregation
- Safe harbor plans, QNECs, QMACs, recharacterization and corrective distributions are not modeled
Frequently asked questions
What is the difference between the ADP and ACP tests?
The ADP test compares employee elective deferrals of HCEs and NHCEs. The ACP test compares employer matching contributions and employee after-tax contributions.
What happens if a plan fails the ADP or ACP test?
The plan must correct, usually through corrective distributions to HCEs or additional employer contributions for NHCEs. Corrective distributions made within 2½ months after the plan year end generally avoid a 10% excise tax on the employer.
Can this replace annual testing?
No. It is a screening tool. Annual testing needs participant-level census data, plan terms and qualified review.
Related tools and guides
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Model a two-tier 401(k) employer match, such as 100% of the first 3% plus 50% of the next 2%, and see the match in dollars and as a percent of pay.
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Upload a synthetic or de-identified 401(k) census CSV and get an instant exception report. Processing stays in your browser; nothing is sent to a server.
See this work inside the pilot build.
Share the numbers you modeled and the workflow behind them. We will walk through how KinetiPlan handles that work and what a focused pilot could measure.