Search the Community

Relevant Background Information: 401(k); Safe Harbor Non-Elective; additional non-SH match. Age 21 & 1 year of service with dual entry on 1/1 & 7/1. Adoption agreement specifies that participants must complete 1 year of service to receive the match. Further, it defines 1 year of service as 1,000 hours. Match formula = 50% on the first 3% of comp deferred (max 1.5%) Questions: 2-part question whether ACP testing is required on non-SH match or not... IRC 401(m)(11) indicates no testing IF... - the additional match is not based on deferral exceeding 6% of comp (okay); - Ma formula cannot escalate (okay); - % cannot be greater to HCEs than NHCEs (checkmark); - Ma cannot exceed 4% (okay); and - the additional match cannot impose an hour and/or last day requirement to receive. That last point regarding hours is where we need clarification. Adoption agreement specifies that participants must complete 1 year of service to receive the match. Does not specifiy hours in that section. But, the agreement defines 1 year of service as 1,000 hours elsewhere. I could see the last point causing a need to ACP test. Here are my questions... (1) Would we need to ACP test? It just so happens that all participants who deferred worked more than 1,000 hrs anyway. Anyone with less than 1,000 hours didn't defer to receive a match. Therefore, no one was excluded from receiving match due to hours. (2) If question 1 is yes, then due to additional facts and circumstances would that be enough to avoid ACP testing for the plan year?