Description
This report is to identify the highly compensated employees (HCEs) anddetermine whether the given benefit plan(s) comply with thenon-discrimination tests. The report also provides the option to updatethe HCE indicator of the HCE Information infotype (0375) using abatch job if the employee is highly compensated.
On the application tool bar of the first screen after the report isexecuted, in addition to the standard pushbuttons, there are twopushbuttons specifically created for this report. They are:

• General Info and


• Tests

A different screen will appear as you select either button; the defaultscreen is General Info. The function of each screen is describedbelow.

General Info:
The General Info screen is first used to define the testing population.
In the Selection section, you can choose the employees to betested by: Personnel number, Company code, Personnel area, Personnelsubarea, Employee group, Employee subgroup, Payroll area, and Job key.You can control the testing group by imposing further restrictions suchas Benefit Area, Benefit Group, and Benefit Status using the optionDynamic Selections (Control + F1).
In the General Information section, you enter the TestingYear. This field is mandatory; the default value is the year beforethe current year.
The report uses the amounts of wage types /701 and /Q01 in table TCRT ofthe payroll result from the last pay period that has the pay date withinthe testing year to calculate an employee's compensation. You can adjustthis amount in the Define Compensation Adjustment section byentering the wage types in the fields Wage types to be added andWage types to be Subtracted.
Note that the report will add the amount of the wage type of the "Wagetypes to be Added" option into the compensation regardless of the signit is stored with, similarly with "Wage types to be subtracted".
In the section Choose Benefit Plan(s) For Testing, you need toenter the Benefit Area and Plan(s) to be subjected to non-discriminationtesting.
If you select Perform All Necessary Tests, the reportautomatically runs all the tests needed to determine whether the plancomplies with the tests. That is, the report first subjects the plan tothe Ratio Percentage Test; if it fails, the plan is subjected to theAverage Benefit Test; if this test fails, the plan fails. If the planpasses one of the two above tests, the report is then subjected to theADP and ACP tests; the result of the plan will be the result of the ADPand ACP test. This avoids having to run each of these tests individuallyon the Tests screen.
The Identify Highly Compensated Employees section, you have thefollowing options:
You can enter the Minimum Annual Taxable Comp in the CompensationLimit field, which indicates the lowest compensation limit of theprevious year of an employee to be considered highly compensated.
You can also indicate which method you want to use to identify HCEs. Ifyou choose the first one, i.e., 5% Company Owner Or CompensationExceed Limit Entered Above, you will need to maintain the indicatorCompany Owner in the HCE information infotype (0375). Ifyou choose the second method, namely, Top 20% Employees WhoseCompensation Exceed Above Limit Plus 5% Owner, you have the option ofexcluding more employees by entering the information in the sectionExclude Employees From HCEs Identification For The Second Method.
If you select the option General Exclusions As Permitted By Lawthe system displays a dialog box with the following options:


• If you choose "Have Not Completed 6 Months Of Service", you must
maintain Date Specifications infotype (0041) and provide the datetype indicating the "First Day Of Work" in the line below.

• If you choose "Normally Work Less Than 6 Months During The Year", you
must maintain the indicator "Seasonal Worker" in the HCE information
infotype (0375).

• If you choose "Have Terminated", you must maintain the Date
Specifications infotype (0041) and provide the date type indicatingthe "Last Day Of Work" in the line below.
The Master Data Exclusion and Benefit Data Exclusionsections provide more options to exclude more employees.
If you want to update the HCE indicators for the HCEs in infotype HCEinformation (0375), you will need to deselect the option TestingOnly, Do Not Update. The report will create a batch input session.
If you select the option Batch Input Information, the systemdisplays a dialog box where you can enter the batch input session nameand the lock date. The default of the session name is the user name ofthe person running the report, and the default of the lock date is thesystem date. You can change the session name and lock date as necessary.
For each HCE, the report creates a record in the HCE informationinfotype (0375), where the HCE indicator is checked. This record isvalid for one year, starting from the first of the year after thetesting year.

Tests
The Tests screen is used to gather information about various tests:


• Ratio Percentage/Average Benefit Tests: In the Ratio Percentage
Test section, select Perform Ratio Percentage Test if you want torun this test. The option Exclude Employees From Ratio PercentageTest provides similar exclusions as in the Exclude Employees FromHCEs Identification For The Second Method outlined above.

• Average Benefit Test: The compensation values used in this test
are the same as those in the Identify HCEs section. If the plancan be integrated with social security, you can enter the SocialSecurity wage types to be included in the annual contributions; theamounts of these wage types will be treated as absolute amounts, i.e.,with positive signs and added to the compensation.

• In the Actual Deferral/Actual Contribution Percentage Tests
section, you enter the necessary information for the ADP and ACP tests.
The "Maximum Annual Compensation" field indicates the maximum amount ofcompensation to be put in the denominator to calculate the benefitpercentage.

• For the Actual Deferral Percentage Test, the Elective Deferral
(pre-tax employee contribution) is automatically included in thecontribution. You need to enter the wage types for the QNECs and QMACsif you want these amounts to be included in the contribution.

• For the Actual Contribution Percentage Test, the after-tax
employee contribution and matching contribution are automaticallyincluded. Similarly to the ADP Test, you need to enter the wage typesfor QNECs and QMACs. As for Social Security, these amounts will betreated as absolute amounts, and will be added to the contribution.
Note:
If you select any of the following checkboxes, "Perform All NecessaryTests", "Perform Ratio Percentage Test", "Perform Average Benefit Test","Perform ADP Test", or "Perform ACP Test", you will have to enter thevalues for the fields "Benefit Area" and "Benefit Plan", in the screen"General Info". In addition, if you select "Perform All NecessaryTests", "Perform ADP Test", or "Perform ACP Test", you will also need toenter value for the field "Maximum Annual Compensation" in the screen"Tests".
An error message will appear if you have not done so, in order to go tothe correct screen to enter the required values, you will first need todeselect the appropriate selection options.
Definition:
Benefiting under a plan: an employee is considered benefiting under aplan if an infotype record for that plan exists at any time during thetesting year.