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What is a Contribution Nondiscrimination Test (CNT)?

April 26, 2017CNT contribution nondiscrimination Test

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What is a Contribution Nondiscrimination Test (CNT)?

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Your NADART retirement plan must be tested annually for compliance with Internal Revenue Service contribution nondiscrimination requirements. Regulations require a comparison of the average contribution percentage (ACP) of those employees classified as highly compensated and the ACP of those employees classified as non-highly compensated. If the difference between the ACP for the two groups is not within prescribed limits, corrective action must be taken. Corrective action can be either contribution refunds to highly compensated employees or additional employer contributions to non-highly compensated employees. If your Plan is a 401(k) Plan, this process is repeated for the average deferral percentage (ADP).