• The Ratio-percentage test compares the proportion of non-highly compensated (NHC) employees benefiting to the proportion of highly compensated (HC) employees benefiting under a plan.
• The Average Benefits Test compares the percentage of NHC employees benefiting from the plan and benefits received by these employees from the plan, as a percentage of compensation to the comparable figures for HC employees.

You may run your test any day during the plan year that is reasonably representative of workforce composition and plan coverage ("snapshot testing"). Testing may be as seldom as once every three years as long as there haven't been any significant changes since the last test date, e.g., changes in legal requirements, plan provisions, or employee population or participation ("three-year testing").

To satisfy the ratio-percentage test, the percentage of NHC employees benefiting under each plan or aggregation of plans must equal at least 70 percent of the percentage of benefiting HC employees. "Average benefits" applies a subjective and an objective test to employee coverage, then compares all benefits received to assure that NHC employees' average benefits are at least 70 percent of HC employees' average benefits.

If a plan fails to satisfy one of these tests and no correction is made, at least the HC employees may be taxed on contributions made during the year the plan fails. However, plans have until the fifteenth day of the tenth month after the end of the plan year to correct the failure by expanding coverage.

• Read Understanding Minimum Distribution...Making Your Decision With TIAA-CREF • Read TIAA-CREF Group SRA Loans • Read TIAA-CREF Retirement Plan Loans		• Read Pension Primer: Comparing 403(b) and Qualified Plans • Read Pension Primer: The Hows and Whys of Replacing a Defined Benefit Plan • Read Pension Primer: Keoghs: Retirement Plans for Self-Employed Income