3% Safe Harbor 401(k) w/ X-tested PS

[dmb]

If the HCEs are receiving a 20% of comp PS allocation, can the NHCEs receive a 5% allocation that includes the 3% Safe Harbor allocation or does the 5% allocation need to be given in addition to the 3% Safe Harbor allocation?? It has been my understanding that the 5% allocation can include the Safe Harbor allocation, now i'm being told (without reference) that it can't. Thanks.

[Belgarath]

I'd say it depends. If your 3% is being provided via the Safe Harbor MATCH, then I would agree that you cannot use it to satisfy Gateway. If it is being provided via the mandatory NONELECTIVE Safe Harbor, then it can be used toward Gateway.

The only citation I can give you quickly is IRS Notice 98-52. This allows the nonelective Safe Harbor to be used toward 401(a)(4) testing. There may or may not be other cites that someone can provide to assist you.

[Blinky the 3-eyed Fish]

I think the 3% implies the nonelective safe harbor. Always remember it can do triple duty: 1- satisfy the need for an ADP test; 2- satisfy top heavy; 3- be used to satisfy the 401(a)(4) requirements of which the gateway is a part.