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Minimum Coverage Requirements

Ascensus Consulting is an independent third-party administrator that performs required compliance testing and non-discrimination testing for tax qualified defined contribution, defined benefit, and cash balance plans to help ensure that employers are following the rules and laws set forth by the Internal Revenue Service and the Department of Labor.

The compliance tests help verify that contributions are being allocated properly and in a timely manner. The non-discrimination tests help ensure that the plan does not discriminate in favor of highly compensated employees.
The consequences for employers that are not in compliance, intentionally or not, are severe and could include heavy civil or criminal penalties imposed by the Internal Revenue Service and Department of Labor.
The Minimum Coverage Requirements Rules require employers cover a certain percentage of eligible employees. For this purpose, each employee of each employer of a Controlled Group or Affiliated Service Group must be considered. A plan must meet either of two specified tests: the Ratio Percentage Test or the Average Benefits test.

Contact us for more information on compliance testing.