Nondiscrimination Testing for 401(k) Plans

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 29, 2023

A nondiscrimination test is required for 401(k) plans to ensure that the plan does not improperly favor highly-paid employees or "key" employees, such as the owners.

The tests establish what percentage of the assets belong to highly-compensated employees and key employees, how much the company contributes, and how much of their income employees defer.

Connect With a Vetted 401(k) Advisor

* required fields

Nondiscrimination Testing for 401(k) Plans FAQs

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

Meet Retirement Planning Consultants in Your Area

Find Advisor Near You