Safe Harbor 401(k)

[Guest Melissa Winslow]

I have a client who has a 401(k) plan which is currently matching 50% of each participants deferrals. Matching contributions cannot exceed 6% of salary. Also, the plan is top-heavy. The client would like to adopt a safe harbor plan to avoid the ADP & ACP failures it consistently encounters as well as meet its top heavy contribution requirements. If the plan makes a safe harbor contribution via the 3% nonelective contribution, am I correct that the top heavy minimum contribution requirement as well as ADP safe harbor test would be satisfied? And, I believe the current matching provision would need to be amended to limit matching contributions on no more than 6% of salary to meet the ACP test safe harbor. Comments please...

[Alf]

You are correct.