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Consequences of Annual Compliance
Testing Failure

Coverage Testing

If a qualified retirement plan does not pass coverage testing, plan sponsors are required to bring additional Non-Highly Compensated Employees into the plan until the plan passes.

Nondiscrimination Testing

Plans can make corrective distributions or make additional employer contributions.

Top-Heavy Rules

A top-heavy plan does not fail a test per se, but there are minimum funding and vesting requirements.

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