Are Safe Harbors plans required to pass ACP testing if a plan has After Tax Contributions enabled?

Hi

There is an ongoing discussion in one of the companies I work with. They are evaluating moving from a SIMPLE 401k plan to a Safe Harbor plan, to ensure that the compliance tests are passed and to enable a possible Mega Backdoor Roth plan. I have been able to simulate the tests and with the Simple 401k plan, the ACP falls into non-compliance quite quickly. However, I've done some research and found that Safe Harbor plans offer some type of waiver over tests. But I've also found that after-tax contributions do not qualify for safe harbor test exemption, meaning that even when the company adopts a safe harbor strategy, it is very likely we would fail the ACP test.  Can someone help me confirm if safe harbor plans with after-tax contributions are subject to ACP testing? (and, why are they called safe harbor if they are not entirely safe?). Thank you so much for your help!

FR

ACP testing is required for after tax contributions, safe harbor does not exempt you from this.

here is the regulation cite if helpful.  Treas. Reg. §1.401(m)-3(j)(6)

Thank You so much, by any chance do you know where I can find the IRS regulation that explains this matter? I've looked for it everywhere without any luck

Guys, you are great. Thank you so much!