SH 3% non-elective with matching

[Richard Anderson]

This is the first time that we have a plan that is going to be adding matching to the

safe harbor non-elective.

If accrual requirements (hours or last day) are added to the matching contribution

does that negate the ADP safe harbor? Or does it just require that ACP testing must be done?

[Guest Sieve]

The ADP SH is not impacted if matching contributions are made in addition to the ADP contribution, even if those matching contributions are subject to end-of-year or 1,000 h/s conditions. You just ahve to pass ACP testing.

[Bird]

...but you can add a match not subject to testing as long as it doesn't match deferrals in excess of 6% of comp and doesn't exceed 4% of comp, and I believe that can't have an hours or service condition.

[Kevin C]

If you are asking about adding an hours or last day requirement to match provisions that currently satisfy the ACP safe harbor rules, I would recommend you make the change effective the first day of next plan year.

1.401(m)-3(f)Plan year requirement

(1)General rule.—

Except as provided in this paragraph (f) or in paragraph (g) of this section, a plan will fail to satisfy the requirements of section 401(m)(11), section 401(m)(12), and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of that plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in paragraph (h) of this section, a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of §1.401(m)-1(b) if it is amended to change such provisions for that plan year. Moreover, if, as described in paragraph (j)(4) of this section, safe harbor matching or nonelective contributions will be made to another plan for a plan year, provisions under that other plan specifying that the safe harbor contributions will be made and providing that the contributions will be QNECs or QMACs must also be adopted before the first day of that plan year.

Notice that it says you will not satisfy the discrimination requirements of 1.401(m)-1(b). That is not the same as losing the ACP safe harbor.

If you are asking about adding an hours or a last day restriction to an existing non-safe harbor match, has anyone already satisfied the current requirements to receive the match?

[Richard Anderson]

There will be no issue of amending or changing match mid year.

No prior matching contributions in the plan. We just want to make sure that

adding a matching contribution with accrual requirements (last day for sure, maybe hours)

will not cause the plan to lose ADP safe harbor status.

[austin3515]

You're OK - it only blows the ACP safe harbor, not the ADP safe harbor.