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401k Test

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How do I Use the Online Testing Program?

Simply upload your employee data, run the test, and print the results.
You could enter a couple eligibility requirements before running your first test; or just use the 'drag-and-drop' feature to categorize employees as eligible, ineligible, HCE, etc..
This service is very valuable, especially when officers are deciding how much of their year end bonus to put in the 401k.
We suggest you have a professional TPA review your first test. This will give you the confidence to run test after test any time you want throughout the year!
Click here for other FAQs


Our site went active in 2008 after more than 6 months of beta testing.
Here are comments & endorsements from associates & clients:

"You have a great product!"

Beth Harvieux, FPC
Payroll Administrator, Wealth Enhancement Group

"401ktest.com gives us the ability to quickly and efficiently provide our clientele with a valuable web based service. The site is priced well, easy to use, and helps us to better fulfill the needs of our customers."
John Magaletti
President, SwiftChecks Payroll Services

"401ktest is a fabulous tool for plan sponsors. Its online capabilities are friendly and efficient."
Rob Martin, Qualified Pension Administrator
President, Martin Consultants, LLC

"Worry no more about 401k compliance headaches. 401ktest will leave you feeling completely confident about your 401k plan’s compliance with anti-discrimination rules at a fraction of the cost of competitors".
Tom Schaller
President / Founder, Window and Door Screen Pro.
Owner & Instructor, House of the Rock Martial Arts: Westerville Branch

This web site was reviewed and enthusiastically endorsed by a national government agency. The revenue agent who tested the site would not allow me to quote him or list his employer by name, so I'll leave his identity to your imagination.
Anthony C. Gruber, CPA
President, Projected Financial Statments.com

“We failed our Discrimination test 3 years in a row, even though our Payroll and our 401k administration are with fortune 500 companies.
We have a great deal of bonus activity in the 4th quarter, so 401k compliance is challenging for us. But with 401ktest, we can run a test each time we do payroll to make sure we are still in compliance. We do the test before payroll is finalized: That way we can revise our Officers’ withholdings if we have to”.

The name of the Company, the Administration firm, and the Payroll firm have been withheld for obvious reasons.
This is an embarrassing antecdote, but it happens all too often.


Clients who provide comments and questions are kept anonymous to protect the client: Benefit Administration is a very private matter, so we will not refer to a client's identity without their permission.


Click one of the hyperlinks below to see the Question/Comment in detail.

How do I set up a file that can uploaded to 401ktest.com?

Your Payroll Company may have the ability to create this file for you. Otherwise follow these simple instructions:
The file must be in tab-delimited format and must have the following columns. The file can easily be prepared in Excel, then saved as a .txt file rather than .xls:
    1. Employee Number (optional - may be a blank column)
    2. First Name
    3. Middle Initial
    4. Last Name
    5. Birth Date (M/D/YYYY)
    6. Hire Date (M/D/YYYY)
    7. Hours Worked This Year (Stored as a whole number. IE: 2080.75 becomes 2080)
    8. Gross Pay
    9. 401k Withheld
    10. Company 401k Contribution
Make sure your numbers & names don't include comma's, colins or parentheses. The upload process doesn't recognize these symbols.

Click here to see a sample text file with fictitious payroll data. Save it to your computer then upload it to Excel, then you can see the .txt document in columns, which will help you see how the live data should be configured.

What is a TPA

TPAs (Third party Administrators) do the “behind-the-scenes” work that’s mandated by the government - things that have nothing to do with investments or investment account management. We help you with plan design and compliance:
  • Plan document creation, and management – The DOL publishes document updates almost weekly, so this compliance work is the most time-consuming part of our job.
  • Annual return preparation.
  • Compliance testing – There are lots of tests!
  • Employee loan administration. Loans have to be done a certain way, based on options disclosed in the plan document.
  • And finally; Our Erisa attorneys offer advocacy when companies get in trouble with the DOL. As a provider of online services, we get a great deal of requests for help by companies that have been 'abandoned' by their TPAs, so this is an important part of our practice, and something we're happy to do!
  • TPA services often go unnoticed till something goes wrong, or till you are audited by the DOL. Even if you don't notice your TPA service, you could still be paying to much for too little service.

    Why is 401kTest.com my best choice for TPA services?

    We feel we are the best TPA in the country, and here are several reasons why:
    Pricing: With almost 2,000 plans under management, and very low overhead, we offer excellent fees due to scale.
    Professionalism: We have over a dozen employees that have been with the company for more than 10 years, we've been practicing since the early 70s, and we have an excellent team of Erisa Attorneys on staff.
    Bandwidth: We have grown significantly in the last 4 decades - training employees and opening over a dozen offices around the US. We are the expert's expert in the pension industry, and we're eager to continue expanding and serving clients all over the country.
    Flexibility: We work with just about any Investment Advisor and investment platform. And we have teams that specialize in different plan sizes - from 1 employee to over 5,000!
    Creativity: We know one size does NOT fit all when it comes to employee benefits. We'll work with you to provide a pension design that reflects your company's goals, budget, and best use of your benefit dollars.

    What Browsers work best with 401kTest.com?

    401kTest.com works well with almost any browser - Except Chrome. Here are the most compatible browsers, to our knowledge:
    • FireFox: 401kTest.com was designed using FireFox, and testing on other browsers; so FireFox is our favorite.
    • Internet Explorer:
    • Safari: We've done a number of tests using Safari. It seems to work well with our program.
    We haven't tested the site on every browser, but of all the PC browsers we've tested, only one gave us problems - Chrome.
    Most browsers are free, and easy to download, so this restriction shouldn't stop you from using and enjoying 401kTest.com.

    Does your software do testing for 'Cross-Tested' or 'New-Comparability' plans?

    Yes! 401ktest.com can help with Cross-Testing.
    401ktest.com won’t systematically segregate your employees into groups, but there are a couple options if you want to do cross-testing:
    • You can upload separate groups for testing. The software is designed to upload employee data quickly, and delete employee data quickly. So you can upload the group, run the tests, print the spreadsheet, and delete the group in just minutes! This option would work best if you have 50 or more employees in your group.
    • You can also use the drag-and-drop feature to pull certain employees out of a test – Just move them to the ‘ineligible’ group and their data will have no bearing on the test. If your company has a handful of employees, this option might be the fastest.
      Drag-and-drop is an routine we added to the testing process for convenience: You can instantly move an employee from one category to another!
      The drag-and-drop feature doesn't permanently change the employee's status: It only changes an employee's status for the test you are performing. This is a very powerful feature for funning proforma testing like New Comparability, etc.

    Do You Recommend Safe-Harbor Plans to Your Clients?

    Sometimes: It depends on the situation.
    Under certain circumstances, safe harbor is the only advisable option. But keep in mind, safe harbor rules are a government statute; so there shouldn't be an expectation that it's a good use of company assets under all circumstances.

    (401k Plan design) should be done deliberately: You need to weigh your options and use competent professional council. That said; there's one question that all plan-design engagements should answer up-front:
    Is the plan being designed for the employer(s), or the employees?
    What's the primary purpose of the 401k? Is it a tax deferral plan for the employer(s), or is it part of the Employee Benefits package?
    A company with 20 employees or more might decide the plan is primarily for the employees. In that case, the 401k should be designed as part of the total compensation plan; company resources should be allocated to the benefits that are most appreciated by the employees.
    IE: Where are your benefit dollars best used?
    What do the majority of your employees consider to be most valuable?

    Can You Suggest a Match or Profit-Sharing Formula?

    (Designing benefits and compensation plans) is an art rather than a science. You have to look at the company's unique qualities and then create a formula that achieves the company's goals.

    These match formulas are presented with the assumption that your 401k is designed primarily for the benefit of your employees, not for your officers & directors. 401k design is complicated, so you should consult a professional before initiating a plan. For example; when a small company uses something other than a Safe Harbor match, the plan can easily become top-heavy. Remedies for a top-heavy plan can be more expensive than a safe-harbor match, so choose your plan design wisely. Here are a few ideas, based on the limited scope mentioned above:
    • No match.
      If a majority of your work-force is young, and perceives little value for retirement dollars, don't offer a match. I'd still strongly suggest offering a 401k plan for the few employees that want to participate though.
      I once worked with a company where half the officers and most of the employees didn't care about retirement.
      I suggested they offer a plan with no match, and use their benefit dollars to beef up their year-end bonuses.
      You can always let employees put their bonus in the 401k plan if they want.

    • 25 - 50% match for up to 25% of withholdings.
      This is the antithesis of the first suggestion. If you have a work force that values retirement, then give it to them!
      A few notes about this kind of match formula:
      • I rarely suggest a $1 for $1 match when a plan is designed strictly for the employees.
        Very few people fully appreciate a match of this magnitude. However; most will try to maximize the match, because it's so large, and some will resent the company for it - Maximized 401k contributions have a negative affect on short-term cash-flow.
      • Matching up to 25% favors lower paid employees who want to maximize their 401k.
        This allocates pension dollars to those who appreciate it most, which gives the company a better return on their benefit dollars spent.
        Most HCEs can't withhold at the higher percentage - The maximum compensation (for the match formula) is $260,000, but the withholding limit is $17,500 - 6.7%.
        So the higher match favors lower-paid employees with the foresight to prepare for retirement - These are usually good workers, in my experience.
      • Matching up to 25% will help HCEs by raising the ADP/ACP limit
        Some employees who will take advantage of the higher match percentage, and this will raise the ADP limit, allowing HCEs to contribute more.

    • Discretionary match based on company profit.
      I would partner this type of plan with some type of after-tax bonus plan. This will provide incentive for retirement minded people, as well as those who are not.

    Other Suggestions for Employee-Focused Retirement Benefit Plans:
    • Don't provide a Profit-sharing contribution.
      Employees who don't choose to participate in the 401k should not have retirement funds allocated to their accounts. In doing this, you are spending money that is not adequately appreciated.

    • Have the admin fees paid by 401k funds. Don't have the company pay them.
      If the company is going to contribute anything to the 401k, it should in the form of a match. The match is more popular than free administration almost 100% of the time.
    Tony Gruber, EzineArticles Basic Author
    This FAQ was also featured on EzineArticles.com....

    Employee Files are Sometimes Listed Twice (after I upload payroll data).

    What's going on? How do I fix this?
    If there has been any change to an employee's name or ID number, they will be uploaded as a new employee - essentially causing them to be listed twice. The change could be the smallest thing, like a comma or period added to the name.
    Here are a couple ways to fix this, or prevent it from happening:
    • You can delete a single employee by clicking 'Delete Employee' on the left menu bar.
        Go to 'Edit Employees';
        pull up the duplicate employee file;
        click 'Delete Employee';
        then follow the prompts.

    • Before uploading more current employee data, you can click 'Delete Employee Data' on the menu bar and follow the prompts.
      • This option will delete all employee data for all years.
      • Since data can be imported in seconds, this doesn't really cost you time, even if you are using the prior-year-method.
      • Once import files are configured properly, it only takes seconds to import them, or re-import them.

    A Large Consuting Firm Finds Multiple Mistakes in Their Data!

    Our site is designed to help companies with 200 employees or less, but a temp. agency (with 8,000 employees) decided to try our software. They ran a test and got the same disappointing results as the test performed by their payroll processor. So they called and asked us to review the test for them.

    When we reviewed the data using "Employee Report (xls)", we found dozens of employee records with incorrect start dates and birth dates - either that or they hired a bunch people on day they were born - 1/107 and 1/1/06. As a result, many employees (who should have been included in the test) were categorized as ineligable, including HCEs and Non-HCEs who were participating in the 401k plan!

    This is an easy mistake to make!
    HR departments get busy and enter phony dates in required fields all the time; with every intention of correcting them later. This is just something to be aware of and watch out for.
    It's also an easy mistake to find.
  • After you have uploaded your payroll data, choose the "Employee Report (xls)" option on the menu:
  • Sort your data by start date, hire date, (etc.) to see if any unusual results are found.

    Do you have any employees that are less than 14 or more than 100 years old according to your records? Are there any employees with less than 'o' years of experience? If so; you'll probably get some interesting ADP/ACP test results!

    May I Have a Refund!

    No; we generally don't allow a refund for the single-user license.
    But if you buy a multiple user license and change your mind within 3 business days, we will convert it to a single user license and refund the balance.

    We had our 2nd request for a refund recently (We've been in business since 2007!).
    I told the client we don't allow refunds, but since they asked only 30 minutes after signing up, I would allow it. Then I found out the client had already uploaded their data and performed their first test.
    In the client's 2nd E-mail they wrote: "Your test doesn't agree with the test done by our TPA. They charged almost $1,000 for the test, so we're going to trust their results. We were hoping to find a less expensive testing alternative for next year."

    Based on this information, I took back my offer to give the client a refund.
    The client then reviewed the data a little closer and found that they had put company contributions in the wrong column. When they reconfigured the data in Excel and uploaded it again, the test results were exactly the same as those received from the expensive firm.

    I suggested they still use the firm for year-end testing, but then use the firm to review 401ktest's results for interim testing. This drastically reduces the cost of each interim test, enabling the company to test more often!

    How Many Tests Can I Run With a Single-User License?

    As many as you want!
    A client signed up thinking they were only getting one test for the subscription price. After running their first test, they noticed they were still able to sign in and upload new data. So they called and asked, "how many tests can I run?".

    There's no limit to the number of tests you can perform with 401ktest.com.
    We sell our service as a subscription, which gives you access to the Testing Software and our Educational material. The price is so low, because we want everyone in the small business community to have affordable access to our high quality interim testing program.
    Tell your friends!

    Can 401kTest do the TOP-HEAVY TEST (and other tests required by most 401k plans)?
    If not; can you suggest a web-site that does?

    Short answer:
    No; but we provide detailed instructions for performing several tests, including the Top-Heavy test. The instructions become available on our terminology page when you buy a subscription.

    My site provides detailed instructions on how to perform thE Top-Heavy test, but we are not planning to create a testing process. The Top-Heavy test is easy enough to perform, but it requires much more than an upload of payroll data, and there is a great deal of evidence gathering. Each Top-heavy test is practically customized because there are so many variables. By the time you gather the information you need to perform the test, the rest is somewhat easy. The trick comes in learning the clients situation and gathering the proper data like:
  • What was rolled into the plan and when?
  • Ownership %’s
  • All immediate relatives of 5% owners
  • Etc.

    Can I recommend a site that helps perform the Top-Heavy test? No:
    (Everyone who has taken the time to create a Top-Heavy test) is charging a great deal of money for it – even though the product doesn’t really save time. I suppose it provides some comfort, but the test results are only as good as the data that is gathered and entered. IE: You have to know what you're doing, whether you have a program or not.

    FT William has a relatively comprehensive testing site, and the price-point is better than others. I talk with FT William executives occasionally, and I have lot's of respect for them. So though I haven’t tested their program recently, I’m confident it is still:
  • better than everything else out there.
  • 3 times more affordable, and
  • too expensive for the small business community.
    Don’t misunderstand: FT William has a great product for larger TPA firms! Companies with 300 clients or more.

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