QACA safe harbor with delayed match eligibility

[MWeddell]

I've got three questions for posters. I'm trying to find out what others are doing with these issues.

Assume that a 401(k) plan is intended to satisfy the QACA safe harbor for employees who have attained age 21 with 1 year of service. Match is 100% on 1% + 50% on next 5%. There is auto enrollment beginning at 3% + 1% annual contribution increases stopping at 6% - 10%. Eligibility for deferrals begins 2 months after hire date and eligibility for the match begins one year after hire date. Assume a calendar plan year.

1) Arnold is hired April 1 of year 1. Arnold does not make an affirmative election to contribute. As of what date should Arnold be automatically enrolled: June 1 of year 1 or April 1 of year 2?

2) Beth is hired April 1 of year 1 and earns over $110,000 during that calendar year. For year 2, is Beth included entirely in the age 21+ and 1+ YOS group that does not require testing because it is a QACA safe harbor plan? Or does one include Beth's data from January 1 - March 31 of year 2 in the otherwise excludable group and (because there is now at least one HCE in that group) perform an ADP test on the otherwise excludable group?

3) Carmen is hired April 1 of year 1 and earns over $110,000 during that calendar year. Carmen terminates employment on March 15 of year 2. Does Carmen have to be included in the ADP test for year 2 for the otherwise excludable employees?

I'll suggest an answer to question 3 but will leave questions 1 and 2 open for discussion. Yes, Carmen must be in the ADP test for year 2. There is an early participation rule whereby HCEs from the nonexcludable group can be included in the age 21+ and 1+ YOS testing group, but after looking at Treas. Reg. 1.401(k)-1(b)(4)(iv)(A)(last phrase), 1.401(k)-1(b)(4)(vi)(Example 2), and 1.401(k)-2(a)(iii)(A), it appears that the early participation rule only applies if the age 21+ and 1+ YOS testing group or "plan" is subject to ADP testing instead of relying on a safe harbor. Besides, Carmen never received a QACA match, so it really doesn't seem right to put her in that testing group.

Thanks for any help you can provide.