Safe Harbor 3% Non-elective with Match

[Guest PensionHelpers]

Does a plan that is setup in the plan document as a cross-tested 3% Safe Harbor and makes a 100% up to 4% match subject to ADP/ACP test? The safe harbor notice was also done as a 3% Safe Harbor.

[Archimage]

No. Your formula fits into the safe harbor requirements.

[ccassetty]

I disagree.

The purpose of the notice to employees is to enable them to make appropriate decisions about deferrals. It is required to accurately reflect what safe harbor contribution will be made. If the notice said 3% safe harbor, meaning they would get the contribution whether or not they made or increased their deferrals, they were mislead. Instead, they got the match, which while it meets the formula for the safe harbor, didn't meet the notice requirements. The employees were not given the opportunity to increase their deferrals to make the most of the match.

If the notice requirements were not met, I don't believe you have a safe harbor.

In fact, I'm wondering if the employer is still liable for the 3% safe harbor contribution unless the notice given was a "maybe" notice.

[Blinky the 3-eyed Fish]

I had the same initial response, but after reading the title, I think both the nonelective and match are being given.

[Archimage]

I misinterpreted then. I thought the original poster meant in addition to the 3% SHNEC.

[ccassetty]

Yep, that's what it says. Never mind!

[Guest PORTE]

Since they have added a contribution over and above the safeharbor, do they now have to pass ACP?

[chris]

Depends on what the document says. If the match is discretionary and the doc. limits the match to 4%, etc.... as per Notice 98-52 Vi.B.4.b., then no testing is required.