401kology

Yes, the difference is between the compensation used for allocation purposes and the compensation used for testing purposes and those do not need to be the same.

I am going to pose this a little differently for clarification because my understanding is that if you use a safe harbor match to satisfy the ADP Test that you cannot double dip and use those in the ACP Test with After-Tax contributions. Contribution Only Used Once.Amounts included in the ACR can be taken into account only once. Therefore, any amounts cannot be taken into account to the extent such contributions are used to satisfy any other ACP test, any ADP test, or the safe harbor requirements of the requirements for SIMPLE plans. Similarly, if a plan switches from the current year testing method to the prior year testing method, QNECs that are taken into account under the current year testing method for a plan year may not be taken into account under the prior year testing method for the next plan year. [Treas. Reg. section 1.401(m)-2(a)(6)(vi)](iii) Qualified matching contributions used to satisfy the ADP test. Qualified matching contributions that are taken into account for the ADP test of section 401(k)(3) under §1.401(k)-2(a)(6) are not taken into account in determining an eligible employee's ACR.(iv) Matching contributions taken into account under safe harbor provisions. A plan that satisfies the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for a plan year but nonetheless must satisfy the requirements of this section because it provides for employee contributions for such plan year is permitted to apply this section disregarding all matching contributions with respect to all eligible employees. In addition, a plan that satisfies the ADP safe harbor requirements of §1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4 percent (31⁄2 percent in the case of a plan that satisfies the ADP safe harbor under section 401(k)(13)) of each employee's compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees. So for this example, let's say the ADP Safe Harbor Match is 100% up to 7% (this satisfies the ADP SH but does not satisfy the ACP Test SH - matches on deferrals above 6% and in aggregate is more than 4%). In this example, the match in excess of 4% could be used in the ACP Test, but you could not use the full 7% because the first 4% is the amount necessary to satisfy the ADP Test.