New to Voluntary Contributions

We have a SHNE no PS.  Client (with "help" from broker) decided to add voluntary contributions up to the 415 limit.

Three owners, two are doing the max up to $62K between elective, SH and voluntary. 

To play it safe, ran both ADP and ACP tests, apparently plan passes both on the basis that the unused portion of the employee deferrals were moved over to pass ACP.

Does this make any sense?

You can't shift contributions between the ADP and ACP tests unless both tests are using the same method. Since the ADP test is being satisfied by the safe harbor non-elective contribution (regardless of whether the ADP test would have passed without the safe harbor), I think that prevents you from shifting contributions.

Agreed. See 1.401(m)-2(a)(6)(ii).

OK, elective contributions have been tested ADP and it passes.  Another TPA informed me with SECURE 2.0, a QNEC (in this case, let's say 3% what we're using as 3% safe harbor with all the restrictions of the safe harbor as far as in-service and hardships) can be used to pass ACP.

Is this not the case?

Well, SECURE 2.0 hasn't become law yet, but generally a plan may include a QNEC to help to pass the ACP test in lieu of refunds.  (See what your plan document may already allow, or if a plan amendment would be needed to customize something more tailored for your sponsor's wishes.)

2 hours ago, thepensionmaven said:

OK, elective contributions have been tested ADP and it passes.

Why does this matter?

4 hours ago, thepensionmaven said:

OK, elective contributions have been tested ADP and it passes.

I agree with BIll Preston that it doesn't matter.

The plan document says (presumably) that the plan meets the 401(k) safe harbor conditions and therefore an ADP test is not required.  Presumably the plan year you are concerned with has ended so that it is too late to amend the plan document.

Can I add my two cents here?  If I am understanding the issue, I think it needs to be clear that the SH 3% is used to satisfy the ADP safe harbor.  Plan now has ACP testing since voluntary deferrals are included in the ACP test.  So an additional QMAC contribution would need to be made to pass the ACP test . You cannot count the SH twice.

The safe harbor 3% has been used to satisfy the ACP test.

6 hours ago, thepensionmaven said:

The safe harbor 3% has been used to satisfy the ACP test.

The voluntary after tax contributions then have to satisfy another ACP test on their own.