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(Solved): A business owner is worried their retirement plan will not pass nondiscrimination testing. Why woul ...



A business owner is worried their retirement plan will not pass nondiscrimination testing. Why would a plan sponsor make the 20% election? Group of answer choices They only have to cover the bottom 20% of their workers by compensation. Limiting the compensation test for who is considered an HCE to the top 20% by compensation helps the plan pass the coverage tests. By limiting their contributions to 20% of includible compensation they are able to avoid top-heavy testing. By limiting their deduction to 20% of the contribution they are allowed to forgo nondiscrimination testing.



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