Which of the following statements concerning rules that apply to 401(k) plans is (are) correct? I....

Which of the following statements concerning rules that apply to 401(k) plans is (are) correct?

I. The results of the ADP test can limit the available salary deferrals for the highly compensated employees.
II. A plan must pass both the 1.25 ADP and the 2.0 ADP tests in order to not be in violation of regulations.

Group of answer choices

II only

I only

Neither I not II

Both I and II

Expert Solution

option 2 : 1 only

The results of the ADP test can limit the available salary deferrals for the highly compensated employees.

the actual defferal percentage is a test used in the company that shows the 401(k) plan don't unfairly benefit the high compensated employees, if the test failed conducted by the employes the excess money is give back to the high compensated employees and this amount is taxed.

jeff jeffy answered 2 years ago

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