ADP is Actual Deferral Percentage. Deferrals consist only of employee contributions, so this test does not consider employer contributions and also does not consider employee catch-up contributions. ACP is Actual Contribution Percentage and considers matching and after-tax traditional contributions.
Why do these tests exist? Probably so that the potential tax benefits of income deferral or Roth contributions do not disproportionately benefit higher-income individuals.
https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-the-plan-failed-the-401k-adp-and-acp-non...
