Non-Electing Church 401(k) Testing

[oldman]

IRS Notice 2001-46 provides that non-electing church 401(k) plans are not subject to regulations of 401(a)(4), 401(a)(5), and 414(s). The notice also states that such non-electing 401(k) church plans would aslo have to be operated in accordance with a reasonable, good faith interpretation of these statutory provisions until such further notice is provided.

Therefore, is it correct to say that a non-electing church 401(k) plan could use a non-safe harbor defintion of compensation as a result of being exempt from 414(s) testing, and allocate employer contributions that discriminates in favor of HCEs, but not subject to general nondiscrimination rule of 401(a)(4) and special nondiscrimination rules of 401(a)5)? However, the plan would still be subject to ADP and ACP testing.