BRF on Match Formula

[austin3515]

SH Match is 100% of first 4%.  Discretionary match (no ACP SH) is zero on first four and dollar for dollar on the next 96% (i.e. client wants to match dollar for dollar). Assume top-heavy not an issue.  Do we need to test the 2nd match for BRF because the rate of match increases as deferrals increase OR can we "aggregate" the match formulas and say that everyone gets the same match formula?

 

[Belgarath]

Without doing any research, I'd vote for no BRF testing, unless perhaps  there are special allocation conditions on the discretionary match.

[Tom Poje]

I think this is one of those issues that....

as I recall years ago someone asked if you could start a ACA or  QACA or whatever at 6% and the IRS response was "you probably have issues"

as you say "Can everyone get this match" and the answer appears to be "Yes" so Current availability passes, everyone has a chance

But now you have Effective availability, which is not a mathematical test so even you can't massage the numbers to prove the facts and circumstances. is it reasonable to expect everyone to be able to defer more than 4%?

In fact, if I understand things correctly, the reason the IRS capped safe harbor matches at 6% was that was considered reasonable, anything above that would have to be tested. so unless you have a bunch of NHCEs deferring more than 6% I think the facts say it is unreasonable (oddly enough, even though there is no mathematical test, at least in this case there appears to be one)

I suppose if you ran the ACP test without including the safe harbor match and still pass it would be proof the effectively even the NHCEs can take advantage of this.  even at that, if I had one NHCE at 50% ACP test that would seem like cheating if no other NHCE had anything.

but then, consider the source making these comments..

[austin3515]

I guess the point though is that everyone has the same access to the same match formula when taken as a whole. The allocation conditions are the same, and in fact that the discretionary match has a vesting schedule, so the benefit at the high end is arguably of lesser value anyway.

Any basis for aggregating and saying, for BRF purposes, everyone gets the same dollar for dollar match?

Tom, I assume you agree that a match with no cap is not subject to BRF testing?