414s test

Non-safe-harbor 401k plan has a discretionary match. Compensation excludes bonuses. Both the ADP test and the ACP test pass using 415 comp and using comp reduced by bonuses. However, the 414s test fails by more than 3%. What, if any, correction is required?

If you are passing ADP & ACP with a 415 comp (a safe harbor) as your denominator then I don't think you need to do the 414(s) test or take any remedial action. Same is you were general testing a profit sharing and used a safe harbor comp as your denominator instead of plan comp. I assume comp less bonuses was the plan definition. Passing using that as your denominator only works if you satisfy 414(s), which you don't.

Does this possibly create multiple rates of match that could require BRF testing?

Would BRFs just apply to the formula (which is uniform based on plan comp definition), but not the contribution rates used in the ACP test, or do you have to pass BRFs testing using the rates calculated in the ACP test?

Although you have a uniform formula, it's based on a "non-compliant for 414(s) purposes" definition of pay.  The usual parallel would be with a pro rata PS allocation that fails 414(s), no?

Here is what the ERISA Outline Book says:

"Whether definition of compensation used to determine matching contributions satisfies IRC §414(s) generally is not relevant in analyzing nondiscriminatory availability of rates of match."

And it provides this example:

"Example - uniform match based on reasonable definition of compensation. A 401(k) plan matches 100% of the first 3% of compensation deferred by a participant. Compensation for this purpose is defined as base salary.

➤Marshall is an eligible NHC under the 401(k) plan. His base salary is $28,000, although his compensation under IRC §415(c)(3) is $35,000, due to overtime. Marshall is eligible for a match only on the first $840 he defers (i.e., $28,000 x 3% = $840).

➤Gisele is an eligible HCE under the 401(k) plan. Her base salary is $120,000, although her IRC §415(c)(3) compensation is $140,000 due to a year-end bonus. Gisele is eligible for a match on the first $3,600 she defers (i.e., $120,000 x 3% = $3,600).

Since the same definition of compensation (i.e., base salary) is used to calculate the matchable deferrals (i.e., the first 3% deferral rate), the definition of compensation is reasonable, the same definition applies to all participants, and a uniform rate of match (i.e., 100%) is applied to all eligible participants on the first 3% deferred, the rate of match is available on a nondiscriminatory basis, regardless of whether the definition of compensation used to compute the deferral rates satisfies IRC §414(s). This is true even though Gisele, who is an HCE, is able to receive a maximum amount of match equal to 2.57% of IRC §415(c)(3) compensation (i.e., $3,600/$140,000), but Marshall, who is an NHC, is able to receive a maximum amount of match equal to only 2.4% of IRC §415(c)(3) compensation (i.e., $840/$35,000). Of course, the amount of the matching contributions must also satisfy the ACP test under IRC §401(m)."

Maybe I'm reading this incorrectly? Totally possible!

Well that's a fantastic "out" for your situation, then!