Jay3 Posted June 8, 2009 Posted June 8, 2009 Does a plan operating as a safe harbor (3% non-elective) lose its' safe harbor status if it also provides a match formula of 40% match on deferrals up to 10% compensation.
J Simmons Posted June 8, 2009 Posted June 8, 2009 Does a plan operating as a safe harbor (3% non-elective) lose its' safe harbor status if it also provides a match formula of 40% match on deferrals up to 10% compensation. You'd have to do ACP testing of the match, but not ADP testing of the employee's elective deferrals. John Simmons johnsimmonslaw@gmail.com Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.
PensionPro Posted June 8, 2009 Posted June 8, 2009 The plan would lose its top heavy exemption. PensionPro, CPC, TGPC
Jay3 Posted June 8, 2009 Author Posted June 8, 2009 Is the maximum match they can do without needing testing up to 4% of pay?
Guest Sieve Posted June 8, 2009 Posted June 8, 2009 Jay -- The reason this match would have to pass ACP is because the match violates the SH rules by being calculated with respect to amounts in excess of 6% of compensation. (Treas. Reg. Section 1.401(m)-3(d)(3)(i).) The other rule (Reg. Section 1.401(m)-3(d)(3)(ii)) does not permit a discretionary match to exceed 4% of compensation--i.e., a formula match could exceed 4% of compensation. Both rules must be met to be able to eliminate ACP testing.
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