FAQ 62: ADP--Disaggregation for prior year testing


Please take a look at the attached documentation from the ERISA Outline Book. Is there a way to perform an ADP/ACP test on ASC as described under item 1.a.? I looked and could not tell that there was. Thanks.


When you are using prior year testing, the NHCE ADP/ACP percentage is pre-determined, based on their participation in the previous year. If you are doing prior year testing, and the plan was disaggregated last year, it will use the disaggregated percentages on the ADP Test (TESTADP) screen in the Values section of the plan specs. That is why the ADP Test screen has a separate percentage for otherwise excludable employees and eligible employees.

If the plan was not disaggregated last year, or was disaggregated last year and not this year, the system will perform the calculation to average the percents, as Sal points out in this section. It does this calculation based on the figures on the ADP Counts (ADPCOUNT) screen, which keeps track of counts from the previous year for this purpose.