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What is short-year compliance testing and compensation collection for a terminating plan?
What is short-year compliance testing and compensation collection for a terminating plan?
Updated over a week ago

Short-year compliance testing serves as the final compliance review for a 401(k) plan that terminates before the last day of the plan year (December 31 for all Guideline plans). In this case, Guideline will perform short-year compliance testing as a part of the offboarding process.

Instead of testing the plan using data spanning a full plan year, the data will span from January 1 through the plan’s termination date. For example, if your Guideline plan ended on August 17, we would test the plan using payroll data spanning January 1 through August 17 of that year.

In order to accurately run short-year compliance testing for a plan that is shutting down, Guideline may ask that final compensation amounts be reported. Data needed will depend on the payroll provider that your company used and what kind of wages your company paid in the year that the plan ended.


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