Safe Harbor Formula > 6%

[TH 401k]

Is the regulation allows Safe Harbor Formula to be more than 6%. I have seen Safe Harbor enhanced match formula upto 6% as a common. But I have seen one document and it mentioned 100% up to 9%. It is already breaching the Employer Match limit of 6% and 4% rule. Any where in the regulation it allows more than 6% as Safe Harbor.

[WCC]

100% on 9% satisfies the ADP safe harbor (assuming all other safe harbor conditions are met), but this formula does not satisfy the ACP safe harbor. IRC 401(k)(12)(B)

[BG5150]

I think the ADP SH is anything >= 3%.  ACP SH allows only a % up to 6% of pay.  I think you could do like 150% of deferrals up to 6% of pay. But you cannot match on any deferrals over 6%.

The 4% limit of comp is limited to the discretionary match.  I don' think it's applied to SHM.

[BG5150]

1 hour ago, WCC said:

100% on 9% satisfies the ADP safe harbor (assuming all other safe harbor conditions are met), but this formula does not satisfy the ACP safe harbor. IRC 401(k)(12)(B)

Can you do 150% of deferrals on 6% of pay to get to 9%?  I think you can.

[WCC]

21 hours ago, BG5150 said:

Can you do 150% of deferrals on 6% of pay to get to 9%?  I think you can.

Yes, that would satisfy both ADP and ACP safe harbors.

[TH 401k]

Is that SH formula can be set as more than 6%. I have noticed only in one plan document that the formula is more than 6%. Even though the plan has only Safe Harbor, is the plan is subjected to ACP testing.

[BG5150]

You cannot match on deferrals greater than 6%.  There is nothing to say what percentage of that is acceptable.  So 150% of that first 6% of pay is ok.

[JustSayin]

My take on the rule is that HCEs are more likely to be able to defer >6% than a non-HCE, so allowing a match on >6% is discriminatory in practice.  That assumes that the people writing the laws and regulations thought that far ahead (/s).

[Paul I]

Back to the original question, any match formula that is based on any deferrals in excess of 6% is not a safe harbor formula and is subject to ACP testing. 

A formula that does match deferrals greater than 6% likely is also subject to coverage testing and BRF testing to confirm that the match on the deferrals greater than 6% do not discriminate.