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Actual Deferred Percentage

What is Actual Deferred Percentage (ADP)?

The proportion of earnings withheld by employers under a 401K retirement plan is known as the actual deferral percentage (ADP). Employee 401K compensation should be no discrimination based neither opponent to the lower paid workers nor in favor of higher paid employees, according to IRS and ERISA guidelines. An employer's ADP seeks to ensure that employee 401K benefits are consistent with IRS and ERISA regulations. Where IRS is Internal Revenue Service USA - the public revenue agency; and employee retirement Income Security Act.