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Posted

This question is a piggy back question to the one posted by ratherbereading back in December of 2019.  I have the same situation, and understand that the ADP and ACP testing is applicable to the plan for 2019 since the Safe Harbor Match was suspended mid-year.  The Safe Harbor Match was funded to the point of suspension.  Are the Safe Harbor Match contributions that were funded to the point of suspension considered SH contributions, and thus can be used in the ADP test since they are fully vested?  Or are they to be considered "regular" match (non-Safe Harbor) for 2019 ACP testing purposes (as if the Safe Harbor feature was not in place at all for the entire year)?

Thank you.

Posted

I tested them as regular match - my plan ended up failing the ADP test but passing the ACP test.

4 out of 3 people struggle with math

Posted

Thanks, ratherbereading.  Do you think, then, that any match that is deposited (even though it was technically safe harbor when deposited), should be ACP tested and not used in the ADP test?  I guess I just want to be sure I'm running the testing correctly for 2019 (all 401k deferrals in ADP test, and all match in the ACP test).

 

Posted

If the matching contributions meet the definition of a QMAC (safe harbor contributions would, generally) then they may be used in either the ADP test or the ACP test, but not both. The plan will be subject to both tests.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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