IRS simplifies timing of taxes on ADP corrections
Abstract: Many plans that provide for elective contributions are subject to the actual deferral percentage (ADP) test. This test limits the amount that certain plan benefits provided to highly compensated employees (HCEs) may exceed benefits provided to nonhighly compensated employees (NHCEs). A failing ADP test is something that many plans have to face at some point in time. While this sounds intimidating, the fix is actually pretty easy under new IRS requirements. This article takes a look at the law and provides a few examples.