ADP/ACP Test Safe Harbor Contributions Clause Samples
The ADP/ACP Test Safe Harbor Contributions clause establishes employer contributions to a retirement plan that automatically satisfy the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) nondiscrimination tests required by IRS regulations. Typically, this involves the employer making either matching or nonelective contributions to employees’ accounts, ensuring that all eligible employees receive a minimum benefit regardless of their own deferral rates. By implementing these safe harbor contributions, the plan avoids the administrative burden and potential corrective actions associated with failing the ADP/ACP tests, thereby ensuring compliance and equitable treatment of participants.
ADP/ACP Test Safe Harbor Contributions. The Employer contribution used to satisfy the Safe Harbor provision (select one):
ADP/ACP Test Safe Harbor Contributions. The Employer contribution used to satisfy the Safe Harbor provision (select one):
o (1) Basic Matching Contributions The Employer shall make Basic Matching Contributions equal to 100% of the first 3% of the Eligible Participant’s Plan Compensation contributed as Elective Deferral Contributions and 50% of the next 2% of the Eligible Participant’s Plan Compensation contributed as Elective Deferral Contributions.