An ADP or ACP refund is a result of the plan failing one or more nondiscrimination tests mandated by the IRS. This refund is required for the plan to retain its tax-qualified status.  

The current law attempts to ensure that contributions received by your plan are balanced between employee groups of highly compensated and non-highly compensated employees. Highly compensated employees are generally defined as those earning over a certain threshold in the prior plan year, adjusted for cost of living increases. Refunds may be necessary when a plan received a disproportionate amount of contributions from the Highly Compensated Group.