How many tests are run when using the early participation test for ADP/ACP?

The early participation test for the Actual Deferral Percentage (ADP) and the Actual Contribution Percentage (ACP) focuses on employees who have recently joined the plan and their contribution levels relative to others in the plan. This test assesses whether the contributions of employees who have been part of the plan for a shorter time adhere to regulatory requirements aimed at preventing discrimination against lower-paid employees.

In this context, the early participation test is conducted as a singular assessment that compares the contribution levels of newly participating employees against the overall plan contributions. Since the test aims to determine if these early participants have contribution rates that align with the plan's compliance requirements, it is executed only once rather than multiple times. Therefore, the answer indicating that one test is run accurately reflects the procedure involved in the early participation test for ADP and ACP.