NDTs are mandatory yearly tests that make sure non-Safe Harbor 401(k) retirement plans help the entire staff, not just the highest paid employees and owners. Not meeting these requirements leads to penalties, fines, and lots of administrative work.

Some examples of NDT tests include:

  • ADP test: Compares the average percentage of salary that HCEs defer to the average percentage that NHCEs defer.
  • ACP test: Applies to companies that offer 401(k) match or after-tax contribution.