safe harbor contributions

[LIBERTYKID]

A 401(k) plan provides for salary deferral contributions and employer discretionary safe-harbor contributions. The employer wants to add a matching contribution but only make a 1 percent match on a participant's salary deferrals. Is there any way the matching contribution would not be subject to the ACP test?

[R. Butler]

A safe harbor plan using the 3% nonelective contribution to meet safe harbor can make matching contributions and would not be subject to ACP as long as the requirements of Notice 98-52, Section VI.B. are met.

Examples are provided in the Notice.

[Archimage]

The answer to your question is yes. I am assuming this is a discretionary matching contribution. You are okay as long as your discretionary match does not exceed 4% of compensation.

[LIBERTYKID]

The employer safe harbor contributions were profit sharing type contributons to everyone. Now I want to add the 1 percent match.

[Archimage]

That is okay as long as your discretionary match does not exceed 4%.

[R. Butler]

JONB

Maybe not an issue, but in both posts you indicate you are using a profit sharing contribution. There isn't a necessarily a problem with that, but be sure you are satsifying the conditions of a safe harbor contribution (i.e. 100% vesting, not available for hardship withdrawal, etc.)