ACP Split Testing Method

[Guest dsw713]

Our plan docs are being restated and we have the option to elect the ACP split testing method. I understand the basics of it, but can't find any good info on the pros and cons. For example, if I elect this method of ACP test, can I change it every year? Thanks.

[Laura Harrington]

Our plan docs are being restated and we have the option to elect the ACP split testing method. I understand the basics of it, but can't find any good info on the pros and cons. For example, if I elect this method of ACP test, can I change it every year? Thanks.

Can you explain what you mean by ACP split testing method? This terminology is not familiar to me.

[Guest dsw713]

Our plan docs are being restated and we have the option to elect the ACP split testing method. I understand the basics of it, but can't find any good info on the pros and cons. For example, if I elect this method of ACP test, can I change it every year? Thanks.

Can you explain what you mean by ACP split testing method? This terminology is not familiar to me.

You can run the ACP test under the current year, and the ADP under the prior year method in any year you don't make discretionary matching contributions. It is supposed to be more advantageous for the testing where the HCEs are always getting corrective distributions.

[Tom Poje]

certainly if you have a discretionary match you most likely would want to use current year testing for the ACP testing to avoid the problem in years in which there is no match.

If I remember correctly if you use prior year testing for the ADP test and current year testing for ACP then you could not use the option of 'shifting' deferrals to the ACP test. I prefer to have as many testing options available so that would be a drawback in my opinion.

[Guest Sieve]

As for flexibility to switch back & forth . . . changing from prior to current, in a subsequent year, is allowed without limit, but changing from current to prior can only occur after 5 consecutive years using current year testring (or if the plan only has used current from the get-go)--and testing when the latter occurs is, I believe, more convoluted. Then there's the issue (at least in my mind) of whether a change in testing method must occur prior to the beginning of a plan year.