3% SHNEC

[SMB]

I have been laboring 'lo these many months with the understanding that the 3% SHNEC in a safe harbor 401(k) Plan served a "multi-purpose" function in a Plan's: (1) being able to dispense with ADP (and possibly ACP) testing, (2) satisfying top-heavy minimum contribution requirements, (3) being able to be used as part of the minimum gateway allocation for a cross-tested contribution, and (4) being able to be used in 401(a)(4) general testing with a cross-tested allocation.

A closer reading of some material that I recently came across would seem to indicate that the 3% SHNEC may not necessarily be used for items "3" and/or "4".

Just really confused (not that that's a new phenomenon!) and would appreciate any and all comments or "insights" regarding same - regarding the 3% SHNEC, that is, - not my confusion.

Thanks.

[ERISAnut]

Two thoughts:

1) Do not get SHMAC confused with SHNEC with respect to helping satisfy the gateway into Cross-testing. The SHNEC can be used while the SHMAC cannot.

2) Do not confuse Cross-testing with Integration. The 3% SHNEC may not be used as the base percentage in an integrated allocation formula.

Peace!!

[Tom Poje]

see also 1.401(k)-3(h)(2) basically says 'you can use SHNECs in nondiscrim'

ERISAnut makes a very good point about possibility of terms getting mis-used