Safe Harbor Match including Roth deferrals

[thepensionmaven]

We have a safe harbor 401K with pre-tax and post-tax employee deferrals.

Plan document mentions safe harbor match in terms of both employee contributions.

How is the compensation determined for purposes of the SHM?

The document defined compensation as W-2, box 1 plus pretax deferrals.

Since post-tax deferrals are included in Box 1, I would think the definition of compensation would be the same, whether employee pre-tax or after tax contribution.

[Mike Preston]

Correct.

[Tom Poje]

to expand a little on this (going beyond just a safe harbor plan):

the following question is from the 2012 ASPPA Q and A #30

The §414(s) regulations provide a safe harbor definition of compensation that excludes elective deferrals from the §415 compensation definition. However, the regulations refer to the exclusion as applying to elective deferrals that are not included in gross income. These regulations were written before the advent of designated Roth contributions. Since Roth contributions are treated as elective deferrals for qualified plan purposes, we have administered plans so that the exclusion of elective deferrals includes the designated Roth contributions, and we treat this "net" amount as a safe harbor compensation for IRC §414(s) purposes. Is this correct?

Yes. The intent of the safe harbor exclusions under IRC §414(s) is that all elective deferrals are treated
uniformly. It is proper to interpret the regulations as requiring the exclusion of designated Roth contributions along with other elective deferrals in order to have a safe harbor definition of compensation of nondiscrimination testing purposes.In fact, to exclude only the pre-tax elective deferrals and include the designated Roth contributions in compensation would not be a safe harbor definition of compensation under IRC §414(s).

The IRS agreed with the proposed answer