Safe Harbor Confusion

[No Name]

I have a 401(k) plan with the 3% non-elective option. I want to allocate a discretionary match. I'm confused by Notice 98-52 sections VI.B.3 and VI.B.4.b.

HCE defers 6.34% of comp. Do I do a ratio limiting him to 6%, then allocate so that he gets no more than 4% of comp? Is it and OR or an AND?

I'm confused. I hope you aren't.

[Tom Poje]

safe harbor matches (for purposes of the ACP safe harbor) must be limited to amounts up to 6% of deferrals.

The discretionary match must further be limited to 4% of comp.

Thus, you could have a discretionary match of 66.6% up to 6% deferred, because ee would end up with 4% of comp