True or False: Elective deferrals can be shifted to the ACP test.

Elective deferrals cannot be shifted to the Actual Contribution Percentage (ACP) test, making the statement false. Elective deferrals are contributions made by employees to their 401(k) plans from their compensation and are subject to separate testing requirements, specifically the Actual Deferral Percentage (ADP) test. The purpose of the ADP test is to ensure that the deferrals made by highly compensated employees do not disproportionately benefit them compared to non-highly compensated employees.

The ACP test, on the other hand, deals with employer matching contributions and employee after-tax contributions, measuring the percentage of contributions made by these groups. Since elective deferrals are not part of what the ACP test assesses, they cannot be shifted or applied to this testing process. This distinction is important, as it ensures compliance with nondiscrimination rules designed to protect lower-paid employees in 401(k) plans.

Other options, while they might seem plausible, do not align with the regulatory framework for testing requirements for 401(k) plans.