ERISA requires a certain set of tests to be performed yearly on every 401(k) plan to confirm that they do not discriminate in favor of Highly Compensated Employees (HCEs) and that IRS contribution limits aren’t being exceeded. The testing is likely to happen at the close of a plan year.

Many companies outsource this work to a third party administrator, or TPA, but you should always have a pulse on the testing being done to confirm everything is completed, and to correct any issues to stay compliant.

To learn more about HCEs and nondiscrimination testing, read the article here.