Common use of ADP Test Clause in Contracts

ADP Test. Each Plan Year a determination will be made whether the average of the Highly Compensated Employees' ADPs for that Plan Year, when compared to the average of the Nonhighly Compensated Employees' ADPs for the preceding Plan Year, satisfies either of the following tests: (1) the average of the ADPs for all Highly Compensated Employees is not more than 125% of the average of the ADPs for all Nonhighly Compensated Employees, or (2) the average of the ADPs for all Highly Compensated Employees is not more than two times the average of the ADPs for all Nonhighly Compensated Employees, and the excess of the average of the ADPs for all Highly Compensated Employees over the average of the ADPs for all Nonhighly Compensated Employees is not more than two percentage points. In performing the ADP Test for a Plan Year, the applicable averages will be calculated taking into account each Participant who was an Eligible Employee at any time during that Plan Year.