Guest susan w Posted August 16, 1999 Posted August 16, 1999 Can anyone tell me, either from personal experience or from national statistics, at what rate 401(k)plans fail the ADP/ACP tests? Thanks.
Guest Tom Geer Daily Access Concepts Posted August 24, 1999 Posted August 24, 1999 Higher than it ought to be. About 1/3-1/2 of k plans are k plans because whoever designed them didn't know enough about design. These companies fail the test regularly, when they should be looking at age-weighted, new comparability or other designs. ------------------
MWeddell Posted September 1, 1999 Posted September 1, 1999 Hewitt Associates releases a survey about every other year that has a question addressing this topic. I recall that about 40% of plans either fail or take some corrective action to avoid failing 401(k) & (m) tests.
LCARUSI Posted September 2, 1999 Posted September 2, 1999 Tom... Wow. Since there were about 300,000 401(k) Plans in the US in 1998, that means between 100,000 and 150,000 of them are misguided in their plan design?
Guest susan w Posted September 2, 1999 Posted September 2, 1999 I'm not surprised by the hewitt statistics - seems to verify what I see as a broker. i don't think that the failure is caused by the design of the plan as much as by the HCEs wanting to test the limits and defer as much as possible (and if that means getting a refund at the end of the year, better that than not having deferred enough.)
Guest DottleC Posted September 8, 1999 Posted September 8, 1999 Smaller plans have more volatile demographic changes, and I would have to think that a pretty high percentage of the plans that fail ADP/ACP are of the under 100 size plan. I think the new testing rules have somewhat alleviated the problem with small plans, but I'm not certain of this either.
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