Above & Beyond Retirement, LLC
Retirement Planning Services


Common Plan Questions

What is Annual Compliance Testing?

Qualified 401(k), 403(b), Cash Balance Pension and other such plans are subject to minimum standards to ensure that the owners, executives, and/or highly compensated employees do not receive an unfair level of benefit when compared to the generally employee population.

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  • Minimum Coverage  - Who is in the Plan & benefiting.  Coverage testing looks at which members  from the general employee population are eligible to participate in the plan and makes sure that the plan is accessible to a reasonable number.

  • Contribution Testing - What goes into the Plan. The contributions made each year  (or the accumulation of benefits over time for pension plans) must meet minimum standards.  This is true for not only employer funded contributions (such as match or profit sharing), but also employee deferral contributions made from eligible employee wages.

  • Top Heavy Testing - How assets / benefits are split. Plans where more than 60% of the plan assets/benefits are attributed to Key employees are subject to minimum funding requirements for years in which Key employees receive a benefit in the plan.

For any testing failure there exists one or more correction options.  In addition, there are also several plan design provisions available that can reduce or even eliminate potential testing failures.  The key to running a smooth benefit program is avoiding testing failures all together through consultative plan design, ongoing reviews, and proactive preliminary testing.

It is far easier AND more cost effective to catch potential testing issues in advance...not to mention allowing for more correction options!!

At A&BR we offer all Full Service Administration (FSA) clients the option for preliminary testing in the final quarter of their plan year at no additional cost.  This allows us to stay ahead of potential testing problems.  We strongly believe in the value of a "Proactive", rather than "Reactive", consulting business model.

We also are happy to provide on-demand preliminary testing analysis services for any business sponsoring a qualified plan who may not have access to such customized options via their current provider arrangement.

Angie Darby