Multiple Use Test

[Guest pep]

In plain language, what is the purpose and scope of the multiple use test? What effect does the proposed repeal of this test have?

[Guest]

Basically, multipleuse was designed to cause more plans to fail ADP/ACP testing....

OK, in plain terms:

to pass ADP/ACP tests, both test must pass the '2 test'.

once that has been determined, you sum the HCE percentages (ADP% + ACP%).

the nhce is the greater of

'2 test'(ADP) + 1.25*(ACP) or

1.25*(ADP) + '2 test'(ACP)

in other words, both plans can't use the 2 test when all is said and done. hence 'both' or 'multiple' use.

since shifting of deferrals is permitted, quite often the effects of the multiple use test can be diminished or even eliminated.