401(k) Compliance Guide for HR: 2026 Deadlines & Testing
401(k) Compliance Guide for HR: 2026 Deadlines & Testing
2026 401(k) compliance for HR teams: ADP/ACP testing, Form 5500 filing, DOL audit triggers, HCE thresholds, and every deadline on the calendar.
2026 401(k) compliance for HR teams: ADP/ACP testing, Form 5500 filing, DOL audit triggers, HCE thresholds, and every deadline on the calendar.
401(k) Compliance Guide for HR Teams: 2026 Deadlines and Testing
A practical 401(k) compliance guide for HR generalists running the plan without dedicated ERISA counsel. Covers nondiscrimination testing, Form 5500, DOL audit triggers, and 2026 deadlines.
401(k) Nondiscrimination Testing: ADP, ACP, and Top-Heavy
Three IRS tests check that 401(k) tax benefits aren't concentrated at the top.
ADP test
Compares the average deferral rate of highly compensated employees (HCEs) to non-HCEs. HCEs can't exceed the NHCE average by more than 2 points or 125%, whichever is greater. NHCEs at 4% means HCEs cap at 6%.
The 2026 HCE threshold is $160,000 in 2025 compensation.
ACP test
Same math on employer match and after-tax contributions. Standard match plans rarely fail it. Tiered match or after-tax plans should watch it.
Top-heavy test
Triggers when more than 60% of plan assets belong to key employees — officers over $230,000, 5%+ owners, or 1%+ owners over $150,000. Top-heavy plans owe a 3% minimum contribution to all eligible non-key employees.
What to Do When a 401(k) Plan Fails Testing
Two correction paths:
Corrective distributions return excess HCE contributions as taxable income. Deadline: 2.5 months after plan year-end (March 15 for calendar-year plans). HCEs under 59.5 may owe a 10% early distribution penalty.
QNECs (qualified nonelective contributions) are employer contributions to NHCE accounts that fix the ratio. Immediately vested, fully deductible, usually more expensive than corrective distributions.
Two consecutive failures should trigger a Safe Harbor conversion. Safe Harbor 401(k) plans skip ADP and ACP testing entirely in exchange for a guaranteed employer contribution.
Form 5500 Filing Requirements
Plans under 100 participants file Form 5500-SF. Plans with 100+ participants file the full Form 5500 with an independent CPA audit.
Calendar-year plans: original deadline July 31, extended to October 15 if you file Form 5558 by July 31. Late filing penalties run $250 per day up to $150,000. Missed filings can be corrected through the DFVC program at reduced penalties.
2026 401(k) Compliance Calendar
Jan 31 — Q4 contributions from prior year deposited
Mar 15 — Corrective distributions for failed 2025 ADP/ACP tests
Apr 1 — RMDs begin for participants who turned 73 in 2025
Apr 15 — Correct 2025 excess deferrals
Jul 31 — Form 5500 due, or file Form 5558 for extension
Oct 15 — Extended Form 5500 deadline
Dec 1 — Safe Harbor notice for 2027 adoption
Dec 31 — Employer Safe Harbor and profit sharing contributions funded
Year-round: employee deferrals deposited as soon as administratively feasible after payroll.
DOL Audit Triggers
Late 401(k) contributions
The most common DOL finding. Deferrals must be segregated from company assets generally within 7 business days for small plans. Monthly deposits to align with payroll cycles are already non-compliant.
Participant complaints
Current or former employees can file complaints directly with EBSA. Clean plan administration and clear communication reduce these.
Form 5500 anomalies
EBSA flags late filings, unexplained asset changes, reconciliation errors, and unusual Schedule C fee disclosures.
HR 401(k) Compliance Checklist
Q1 (Jan–Mar): Deposit Q4 contributions by Jan 31. Run ADP/ACP test. Complete corrective distributions by Mar 15. Distribute Summary Annual Report.
Q3 (Jul–Oct): File Form 5500 by Jul 31 or file Form 5558 for extension. Conduct mid-year investment review. File extended Form 5500 by Oct 15.
Q4 (Oct–Dec): Prepare Safe Harbor notice by Dec 1. Hold year-end investment committee review. Confirm employer contributions funded by Dec 31. Review plan document amendments.
Year-round: Deposit employee contributions each payroll. Log deposit dates. Maintain participant notice delivery records.
Get the resource for free
401(k) Compliance Guide for HR Teams: 2026 Deadlines and Testing
A practical 401(k) compliance guide for HR generalists running the plan without dedicated ERISA counsel. Covers nondiscrimination testing, Form 5500, DOL audit triggers, and 2026 deadlines.
401(k) Nondiscrimination Testing: ADP, ACP, and Top-Heavy
Three IRS tests check that 401(k) tax benefits aren't concentrated at the top.
ADP test
Compares the average deferral rate of highly compensated employees (HCEs) to non-HCEs. HCEs can't exceed the NHCE average by more than 2 points or 125%, whichever is greater. NHCEs at 4% means HCEs cap at 6%.
The 2026 HCE threshold is $160,000 in 2025 compensation.
ACP test
Same math on employer match and after-tax contributions. Standard match plans rarely fail it. Tiered match or after-tax plans should watch it.
Top-heavy test
Triggers when more than 60% of plan assets belong to key employees — officers over $230,000, 5%+ owners, or 1%+ owners over $150,000. Top-heavy plans owe a 3% minimum contribution to all eligible non-key employees.
What to Do When a 401(k) Plan Fails Testing
Two correction paths:
Corrective distributions return excess HCE contributions as taxable income. Deadline: 2.5 months after plan year-end (March 15 for calendar-year plans). HCEs under 59.5 may owe a 10% early distribution penalty.
QNECs (qualified nonelective contributions) are employer contributions to NHCE accounts that fix the ratio. Immediately vested, fully deductible, usually more expensive than corrective distributions.
Two consecutive failures should trigger a Safe Harbor conversion. Safe Harbor 401(k) plans skip ADP and ACP testing entirely in exchange for a guaranteed employer contribution.
Form 5500 Filing Requirements
Plans under 100 participants file Form 5500-SF. Plans with 100+ participants file the full Form 5500 with an independent CPA audit.
Calendar-year plans: original deadline July 31, extended to October 15 if you file Form 5558 by July 31. Late filing penalties run $250 per day up to $150,000. Missed filings can be corrected through the DFVC program at reduced penalties.
2026 401(k) Compliance Calendar
Jan 31 — Q4 contributions from prior year deposited
Mar 15 — Corrective distributions for failed 2025 ADP/ACP tests
Apr 1 — RMDs begin for participants who turned 73 in 2025
Apr 15 — Correct 2025 excess deferrals
Jul 31 — Form 5500 due, or file Form 5558 for extension
Oct 15 — Extended Form 5500 deadline
Dec 1 — Safe Harbor notice for 2027 adoption
Dec 31 — Employer Safe Harbor and profit sharing contributions funded
Year-round: employee deferrals deposited as soon as administratively feasible after payroll.
DOL Audit Triggers
Late 401(k) contributions
The most common DOL finding. Deferrals must be segregated from company assets generally within 7 business days for small plans. Monthly deposits to align with payroll cycles are already non-compliant.
Participant complaints
Current or former employees can file complaints directly with EBSA. Clean plan administration and clear communication reduce these.
Form 5500 anomalies
EBSA flags late filings, unexplained asset changes, reconciliation errors, and unusual Schedule C fee disclosures.
HR 401(k) Compliance Checklist
Q1 (Jan–Mar): Deposit Q4 contributions by Jan 31. Run ADP/ACP test. Complete corrective distributions by Mar 15. Distribute Summary Annual Report.
Q3 (Jul–Oct): File Form 5500 by Jul 31 or file Form 5558 for extension. Conduct mid-year investment review. File extended Form 5500 by Oct 15.
Q4 (Oct–Dec): Prepare Safe Harbor notice by Dec 1. Hold year-end investment committee review. Confirm employer contributions funded by Dec 31. Review plan document amendments.
Year-round: Deposit employee contributions each payroll. Log deposit dates. Maintain participant notice delivery records.