Discretionary Matches and ACP Test Safe Harbor

[davef]

Will a safe harbor 401(k) plan automatically pass the ACP test if it provides the basic matching formula (100% on first 3%, 50% on next 2%), plus a discretionary match that does not exceed an extra 2% -- so that the overall match does not exceed 6% of pay?

My reading of Notice 98-52 (Sec. VI.B.1. and 2.) says that the discretionary match will take the plan out of the ACP test safe harbor.

[Guest]

I believe in 1999 you could 'sneak' up to 6%, but beginning in 2000 you are limited to max match of 4%. at that point, you need to run the ACP test and may ignore the portion of the match that satisfies safe harbor.

(but I'm still feeling my way around on these)