403(b)/401(k) Combo

[oldman]

401(k) plan failing ADP/ACP test. 401(k) plan provides for a match of 50% of elective deferrals up to 3% of their compensation. Propose excluding HCEs from 401(k) and setting up 403(b) for HCEs only with nonelective contribution in an amount of 1.5% of compensation (equivalent to matching contriubtion made under 401(k)). 403(b) excludes employees participating in 401(k), so NHCEs excluded from 403(b.

401(k) - ADP, ACP, and Coverage testing not required, but 415 and Top Heavy necessary.

403(b) - Coverage not required, but 415 is.

Is the proposed arrangement correct?

[QDROphile]

Section 403(b)(12) brings in section 410(b) with respect to nonelective contributions.