The employer in a 401(k) plan matches employee contributions. The ADP of non-HCE employees is 6 percent and their ACP is 8.5%. The ADP of HCE employees is 7.5% and their ACP is 11%. Which of the following is true of this plan?

a. The plan passes both the ADP and the ACP test.

b. The plan discriminates in favor of NHCE's.

c. The plan fails the ADP test and the ACP test

d. The plan passes the ACP test but fails the ADP test.

e. The plan passes the ADP test but fails the ACP test

Answer rating: 100% (QA)

Answer is option 4 The plan passes the ADP test but fa... View the full answer