FAQ 53: HCE--Using top paid group election in ADP test


How can ASC's ADP test be run utilizing the "Top-Paid Group" Election? A couple of our clients have elected this in their Adoption Agreement.


Since the top-paid group election relates to determination of the highly-compensated employees, rather than just the running of the ADP test, that option is available when determining HCEs and key employees. When running the HCE/Key calculation (Calculations-HCE/Key), check the "Use Top 20% Rule" box in the upper-right corner of the setup screen and the top-paid group election will be applied in the determination of the highly-compensated employees. Then when you run the ADP/ACP test, only those HCEs will be included in the test.