We are auditing a plan that is a 401(k) that provides a match and a profit sharing contribution using 4.3 and $40,000. I have asked for the 401(a)(4) and the TPA is telling me that it is not needed because any integrated allocation is a safe harbor allocation and therefore the test is not needed.

I thought that the only safe harbor was a pro-rata and an integrated allocation using 5.7 and full TWB, or 5.7 and 20% of TWB. Am I missing something?

Thanks for any thoughts.

There's a whole range of safe harbor permitted disparity allocations formulas. Off the top of my head I remember 5.4% for more than 80%...4.3% I think goes from 20% to 80% of the TWB and below 20% it goes back to 5.7%.

I know that there are diffrerent permitted disparity allocation formulas, but didn't think that they all got an automatic pass on 401(a)(4). I thought it was only the ones I had mentioned in the original post.

Any other thoughts?

They all get a free pass.

try 1.401(a)(4)-2(b)(2)(ii) which references 1.401(l)-2

However, you DO need to see the 410(b) testing for all three plans. The plan might fail there. The three plans are 401(k), 401(m) and 401(a).

Well, I suppose one can't argue with what you say. However, it doesn't really bear on the issue, does it? Couldn't you also have said that you have to test the plan for benefits, rights and features to ensure compliance with the non-discrimination regs?

The concern is that 'an integrated allocation is considered a safe harbor formula and needs not be tested under 401(a)(4)' while correct, might lead some to not do ANY testing. After all, it is a 'safe harbor' plan. By requestion the 401(b) tests you have some assurance the plan has been tested.