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You have likely received a number of notices related to year end Non-Discrimination Testing. To guide you through the 2016 Plan Year Non-Discrimination Test for your retirement plan, below is a general overview of the process.

It is ideal that you complete all necessary steps outlined by the due date the 401k provider stated, but no later than March 1, 2017. If your test requires any refunds to be processed, the IRS deadline to process those refunds is March 15, 2017.

If you would like to review these steps, please reach out to your dedicated Plan Sponsor Support Team.

General Action Items:

1. Review 2016 census and ensure accurate YTD compensation are reported. Also correct any census errors.
a. If you have a large number of edits or information to add, a supplemental census can likely be uploaded.
b. All employees receiving compensation in 2016 should be accounted for in the testing census.

2. Review and confirm HCE and KEY employees.
a. 2015/2016 Owners and 2016 Officers will need to be identified.
b. For first year testing with a new(ish) provider, you will need to provide Lookback (2015) compensation for HCE & Key coding.

Highly Compensated Employee (HCE):
OWNER: More than 5% owner at any time during the current (2016) or preceding year (2015).
COMP: Employees who earned more than $120k during the preceding year (2015).
Key Employee:
5% OWNER: More than 5% owner at any time during the current (2016) or preceding year (2015).
1% OWNER: More than 1% owner during 2016 with annual compensation greater than $150,000.
OFFICER: an officer of the Employer with 2016 annual compensation greater than $170,000.

3. Review Test Results; Approve/submit if test passed. If test failed, reach out first!
a. There are possible options to help test failures. Check in prior to authorizing failed results to ensure all testing strategies have been utilized before issuing refunds.

Hopefully this has been helpful. Please reach out to us with any questions or if you need assistance!