October 9, 2026

Reviewing Preliminary Testing Results Before the Fourth Quarter Rush

October is a useful point in the compliance calendar because preliminary testing information can turn year-end surprises into a planning conversation. For a business owner who sponsors a 401(k) plan, an early look at available payroll and contribution data can help identify questions to resolve. At the same time, you still have time to coordinate with the payroll team, recordkeeper, and third-party administrator.

Preliminary does not mean final.

A preliminary testing report is best viewed as a directional snapshot. It may show how employee deferrals, employer contributions, eligibility data, ownership information, or compensation are tracking before all year-end items post. It is not a conclusion about the plan’s final compliance status, but it can flag inputs that deserve closer review.

The value is often in the conversation behind the numbers. A report that appears close to a threshold may prompt the sponsor to confirm payroll codes, review newly eligible employees, or ask whether anticipated bonuses and year-end contributions have been reflected appropriately. Treat the report as an agenda, not a scorecard, to keep the review practical.

Look for data quality before concluding.

Testing results depend on information moving accurately among payroll, the recordkeeper, and the plan’s administrative records. Small classification differences can matter: a late hire may have a different entry date, an employee may have changed status, or a pay item may be handled differently from the plan’s compensation definition. An early review can surface these questions before the same data is used for a final calculation.

It can help to ask who prepared the file, what period it covers, and which assumptions it includes. Sponsors may also wish to note expected changes through December, such as bonuses, acquisitions, terminations, or employer contributions. That context allows service providers to explain whether a preliminary result is likely to move and why.

Use the report to coordinate people and timing.

The fourth quarter can compress several retirement-plan tasks into a short period. Payroll may focus on bonuses and year-end processing, while the administrative team prepares census data and contribution files. Reviewing preliminary results early gives the sponsor a chance to assign owners follow-up items and define a realistic timetable.

Coordination does not require the business owner to perform the testing. It means knowing which questions have been raised, which records support the answers, and when the team expects to revisit the report. A short written recap after the review can be more useful than an informal exchange because it preserves the assumptions considered at the time.

Separate operational choices from compliance conclusions

A preliminary result may lead to discussion of plan operations or possible year-end actions. Those discussions should remain distinct from a final testing conclusion. The sponsor can ask for an explanation of available options, associated administrative steps, timing considerations, and whether a plan-document or payroll change is involved before deciding how to proceed.

This distinction supports a steadier process. It avoids treating an early estimate as an emergency while still giving the sponsor room to evaluate information with qualified plan professionals. The goal is not to predict a particular outcome; it is to make year-end decisions with a better understanding of the plan’s current data and responsibilities.

Questions to carry into the next review

The most useful follow-up to a discussion of reviewing preliminary testing results before the fourth quarter rush is a short, repeatable set of questions. What facts changed during the year? Which data sources did the team rely on? Who confirmed the information, and where is the final record kept? These questions are intentionally practical. They help a sponsor distinguish between an issue that needs immediate professional attention and a process item to improve before the next annual cycle.

It can help to include the people closest to the work without unnecessarily expanding sensitive information. Payroll can explain how compensation and elections are processed, human resources can confirm employment events and eligibility records, and the plan administrator can explain the effect of those facts under the document and applicable requirements. The business owner or committee can then focus on oversight: confirming that questions were answered, decisions were documented, and responsibilities were assigned.

Finally, keep the review proportionate. A concise meeting note, the reports considered, and a clear list of follow-up items are often more useful than an informal exchange that cannot be reconstructed later. This approach does not guarantee a particular result, and it does not replace legal, tax, or administrative advice. It does create a dependable governance habit: identify the question, obtain appropriate input, carry out agreed actions, and check the process again as the plan and business evolve.

The same discipline can make service-provider conversations more efficient. Sending a short agenda and relevant records before a meeting gives the administrator or advisor a chance to identify missing facts and prepare a focused explanation. Afterward, the sponsor can circulate only the tasks that each internal owner needs to complete. This keeps plan governance connected to everyday business operations while recognizing the dedicated roles of payroll, legal, tax, and retirement-plan professionals. Over time, this record of questions and finished tasks can be a useful reference when the business experiences a staffing change, a new provider relationship, or another event that affects plan administration. Consistently applying this approach can also make annual reviews calmer, more focused, and easier to document. It gives the sponsor a practical reference point to confirm that administrative commitments, provider requests, and internal approvals stay aligned throughout the plan year.

A practical process for plan sponsors

1. Request the preliminary testing package and confirm the data cutoff date. Ask the preparer to identify any missing census, payroll, ownership, or contribution information that could affect the review.
2. Compare the report’s employee groups, compensation assumptions, and eligibility dates with internal records. Flag unfamiliar items and route them to the person who can verify the underlying data.
3. Discuss expected fourth-quarter events with the administrative team, including bonuses, workforce changes, and planned employer contributions. Document which events have been included and which remain estimates.
4. Create a short follow-up list with an owner and target date for each item. Schedule a final review after year-end data is available so preliminary observations do not get lost in the year-end rush.

An early testing review is one component of disciplined plan governance, not a substitute for final administration. By building a repeatable check-in before the fourth quarter becomes crowded, sponsors can improve communication, maintain clearer records, and give their plan professionals better information to work with over time.

Want help reviewing preliminary testing results?

Duncan Williams Asset Management can help you organize the questions raised by an early report, understand the information your service providers may need, and pinpoint areas where additional professional input may be useful. Duncan Williams Asset Management can help you review preliminary testing results, understand the questions to ask your service providers, and identify areas where additional professional input may be useful. To discuss your plan's year-end testing process, call our team at (901) 435-4250 to arrange a conversation about your retirement plan.

Sources & further reading

Disclosure

This material is provided for educational and informational purposes exclusively and does not constitute investment, tax, or legal advice. It is not intended to be, and should not be construed as, a recommendation to adopt any particular plan design, investment, or strategy. The information here is general in nature and may not reflect the current rules or guidance applicable to your specific situation. Business owners and plan sponsors should consult with their own qualified tax advisors, legal counsel, and retirement plan professionals before making any decisions related to their 401(k) or other retirement plans.

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