401(k) compliance glossary for TPAs.

402(g) limit

The annual cap on a participant's elective deferrals across all plans ($24,500 for 2026). Related →

415(c) limit

The cap on annual additions to a participant's defined contribution accounts: the lesser of 100% of compensation or the dollar limit ($72,000 for 2026). Related →

ACP test

Actual contribution percentage test. The same comparison as the ADP test, applied to matching and employee after-tax contributions under IRC 401(m). Related →

ADP test

Actual deferral percentage test. Compares the average deferral rate of highly compensated employees with that of everyone else under IRC 401(k)(3). Related →

Allocable income

The gain or loss on an excess contribution that must be distributed with it when a plan corrects a failed test or an excess deferral. Related →

Annual additions

Employer contributions, employee contributions and forfeitures allocated to a participant for the year, limited by IRC 415(c) ($72,000 for 2026). Related →

Catch-up contribution

An extra elective deferral for participants aged 50 or older ($8,000 for 2026, or $11,250 for ages 60 to 63) under IRC 414(v). Related →

Census

The employee data file a sponsor sends the TPA each year: dates of birth, hire and termination, hours, compensation and ownership. Testing is only as good as the census. Related →

Corrective distribution

A refund of excess contributions to highly compensated employees to fix a failed ADP or ACP test, with allocable income. Related →

EACA

Eligible automatic contribution arrangement. An automatic enrollment design that gives the plan 6 months, instead of 2½, to make ADP/ACP corrective distributions without the excise tax. Related →

EFAST2

The Department of Labor's electronic system for filing Form 5500 returns. Related →

Elective deferral

Salary a participant chooses to contribute, pre-tax or Roth, limited by IRC 402(g) ($24,500 for 2026). Related →

Entry date

The date an eligible employee may start participating, set by the plan document, such as the first day of the next month or quarter. Related →

EPCRS

Employee Plans Compliance Resolution System. The IRS program for correcting plan failures through self-correction, the Voluntary Correction Program or Audit CAP. Related →

ERISA 3(16)

The plan administrator role under ERISA section 3(16). Some TPAs take on part of this fiduciary role for sponsors. Related →

Excess deferral

Elective deferrals above the 402(g) limit for the calendar year. Must be refunded by April 15 of the following year to avoid double taxation. Related →

Force-out

A distribution of a small vested balance of a terminated participant without consent, if the plan allows it. Related →

Form 5500

The annual return or report for an employee benefit plan, filed with the DOL. Due by the last day of the 7th month after the plan year ends. Related →

Form 5558

The form used to extend the Form 5500 deadline by 2½ months. Related →

HCE

Highly compensated employee. A 5% owner, or someone whose prior-year compensation exceeded the IRC 414(q) threshold ($160,000 for 2026 determinations). Related →

Key employee

An officer earning above the IRC 416(i) threshold ($235,000 for 2026), a 5% owner or a 1% owner earning over $150,000. Used in top-heavy testing. Related →

NHCE

Non-highly compensated employee. Every eligible employee who is not an HCE. Related →

Plan compensation

The compensation definition in the plan document used for contributions and testing, capped by IRC 401(a)(17) ($360,000 for 2026). Related →

QMAC

Qualified matching contribution. An employer contribution, fully vested, that can be used to help a plan pass the ACP test. Related →

QNEC

Qualified nonelective contribution. A fully vested employer contribution that can be used to help a plan pass the ADP test. Related →

Recordkeeper

The firm that keeps participant account records, processes transactions and often provides the participant website. Related →

RMD

Required minimum distribution. The minimum amount a participant must take each year after reaching the required beginning date. Related →

Roth catch-up rule

SECURE 2.0 section 603: participants whose prior-year FICA wages exceeded the indexed threshold ($150,000 for 2026) must make catch-up contributions as Roth. Related →

Safe harbor plan

A 401(k) design with a required employer contribution and notice that is treated as passing the ADP test, and often the ACP test. Related →

Summary annual report

A short summary of the Form 5500 that must be given to participants, generally 9 months after the plan year ends. Related →

Top-heavy test

A test under IRC 416 of whether key employees hold more than 60% of plan assets. Top-heavy plans owe minimum contributions to non-key employees. Related →

TPA

Third-party administrator. A firm that handles plan design, compliance testing, government filings and administration for plan sponsors. Related →

General definitions for plan professionals, not legal or tax advice. 2026 figures from IRS Notice 2025-67.