FAQ 823: ADP--Using Net Compensation on the ADP/ACP Test


If I want to run my ADP/ACP test and want compensation to be net of Deferrals and Section 125 contributions, where do I code the Section 125 contributions in the employee's record? I am only using this net compensation for ADP/ACP testing purposes.


If you want to use net compensation for the ADP/ACP test, you would code the Section 125 contributions in the "Cafeteria Plan Contribution" field on the Limits screen in the employee record (or choose the CNTBCAFE item on the LIMITS screen if using the grid). Then when you run the ADP/ACP test, check the box next to either "ADP: Use Net" or "ACP: Use Net", or both, and the net compensation should be used for that test.