After-Tax and first year for 401(m) testing

Plan has never contained after-tax not employer match provisions. Plan is adding an after-tax provision. Plan may add a discretionary match, but it won't be used in 2025. I think plan should still be able to use prior year testing and assume an NHCE rate of 3%. Is that correct? My only pause is that there won't actually be a match in 2025, just the after-tax.  

Thank you for any guidance.

Look at it as, 401(m) test money is 401(m) test money, regardless of if it's 401(k) match or after-tax or even a match based on the after-tax.  I see no issue.

Does the Plan Document currently not allow for match or has the company simply not made matching contributions in the past?

Because I think the two may lead to different results. If the plan currently allows for a discretionary match but they haven't made one, the plan probably already has a testing method (current or prior) and I don't think you can used the assumed 3% prior year rule. If the plan doesn't currently allow for matching contributions and you are amending that in with the after tax, then I agree if you elect prior year testing, the first year NHCE ACP is assumed to be 3%.

The document currently does not allow for either.   I agree that you would get a different result if it did.

Thank you both.

What is the motivation here? Is the approach designed to let some HCEs drop in a chunk of after tax (and do a mega back door Roth) just to take advantage of the 3% testing default?

The ACP test lives by its own rules and can use prior year testing without regard to how the ADP is done. While it is possible, is it really practical?

Is the ADP test using current year testing? If yes, then using prior year testing for the ACP can be exceptionally messy particularly when ADP test fails and associated match has to be removed, and the ACP fails in the same testing year and requires refunds.

It takes a plan amendment to change between current and prior testing (and vice versa), and the change cannot be made at will from plan year to plan year.

The plan should not set itself for major headaches in the future just to take advantage of a one-shot opportunity.