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Is the actual deferral percentage test amount based on a percentage or a dollar amount?

April 26, 2017actual based deferral dollar PERCENTAGE Test

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Is the actual deferral percentage test amount based on a percentage or a dollar amount?

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The amount of elective (deferral) contributions under a 401k plan is not considered discriminatory if the plan satisfies the actual deferral percentage (ADP) test. i.e: Elective contributions under a 401k plan will satisfy the ADP test if at least one of the following tests is met: 1: The ADP of the group of eligible HCE’s is not more than 125 percent of the eligible NHCE’s or 2: THE ADP of the eligible HCE’s is not more than 2 percentage points greater than the ADP of the NHCE’s and the ADP of the eligible HCE’s is not more than 2 times the ADP of the eligible NHCE’s.