Completely Discretionary Match in Safe Harbor Profit Sharing plan

[401king]

I have a plan where we are presenting options to an employer, and the best one is providing a discretionary match of 100% on 6% of salary. This passes the ACP test, but I'm being lead to believe that any match in a safe harbor plan must meet the ACP-Test safe harbor guidelines (no greater than 4% of comp; not matching over 6% of salary).

Can I have a completely discretionary match in a Safe Harbor Profit Sharing plan, as long as I pass ACP? Or must it abide by the ACP-Test SH Match rules?

[K2retire]

What does the document say? Some have the limits to avoid the ACP test written in, others do not.

[four01kman]

If the employer makes no contribution, it will pass ACP, but not meet the requirements of safe harbor.

[chc93]

It sounds like you have a 3% nonelective safe harbor to pass the ADP. In that case, the employer match can be anything, as K2retire says, as long as the plan document allows it. If the discretionary match satisfies the safe harbor for match, you're done. If the discretionary match doesn't satisfy the safe harbor for match, you need to test the ACP. If the plan doesn't allow for the ACP test (we've seen this), then the match must meet the match safe harbor.

[BG5150]

...or you amend the document to allow the discretionary match on top of the SH match.

The SH match will get you out of ADP.

The SH match will get you out of ACP.

The SH match + a restricted discretionary match will get you out of ACP.

The SH match + discretionary match above the restricted formulae, you need to do ACP test.

But, the document has to allow for it.

Is it too late to amend for 2013? maybe not.