Is a Safe Harbor QACA Match of 100% of 6% OK?

[Anagoge]

Would a QACA match of 100% of the first 6% be classified as safe harbor to avoid ADP/ACP testing on an automatic enrollment/increase plan.  I know safe harbor formulas can't match on anything over 6%, but I generally only see QACA matches quoted as one of these 3 options:

• Match 100% of first 1% and 50% of next 5%
• Match 100% of first 3.5%
• 3% non-elective for everyone (not a match)

Some sources I've found say 3.5% is the max possible QACA match, which seems like a fairly low limit for some employers that want to do more.

[Kevin C]

1.401(k)-3(k)(2) says that when applying 1.401(k)-3(c) [the SH Match] to a QACA, the basic safe harbor match formula is replaced with the QACA match formula.  The basic SH match is the minimum that must be provided to be safe harbor.  1.401(k)-3(c)(1) includes the option to have an enhanced match [1.401(k)-3(c)(3)]. So yes, you can provide a larger match in a QACA than the minimum required.  If you are using a pre-approved document, it should have an option to use an enhanced QACA match.  Our volume submitter document allows it. 

 

[Anagoge]

Kevin, thanks for your comments on this issue.  I'm glad to hear this flexibility is available for employers that want to be more generous.