Safe Harbor Match

[Guest jim williams]

Would a 401k plan satisfy the ACP safe harbor requirements if the following matching contributions were made to the plan for the same plan year?

1. Basic Safe harbor match

2. Additional discretionary match of 100% up to 4% in elective deferrals

I understand the limits for an additional match is that it cannot exceed 4% of comp and cannot match deferral contributions in excess of 6% of comp in order to still satisfy the ACP safe harbor requirements. Does the 4% & 6% limits apply to the additional match only or are they the aggregated limits when considering the basic safe harbor match?

[Tom Poje]

no enhanced match was provided, and neither of your formulas match deferrals in excess of 6%, so no problem there.

your rate of match does not increase as one defers more, so no problem there.

your discretinary is capped at 4% of comp so no problem there.this requirement only applies to discretionary.

sounds like you are ok.

[John Feldt ERPA CPC QPA]

So far so good, but I think there's more. If the year begins in 2006 or later, then to avoid the ACP you cannot have last day or 1000 hour conditions for that discretionary match. I may be in error, but that's how I read the final 401(k) regs.