I have a client who wants to match 100% of salary deferrals from 6% to 8% and nothing from 1% to 6%. This is a highly paid, professional employee group, so ACP might be ok. However, I doubt it will pass IRS muster. Any thoughts?

I don't have a cite, but you would have to pass the non-discrimination tests under 401(a)(4) as a benefit right or feature. I'm too brain dead to quote why, but I know prototypes cannot have the feature you are describing.

There's nothing wrong legally with the match at all. It's available to all participants, so benefit, rights, and features testing won't be a problem.

One practical problem is note how little match will be given to those earning $160,000 and contributing $10,000, only 0.25% of pay compared to 2% for most employees. The client should clearly understand that employees earning $125,000+ can't put in a full 8% and won't get the full match. On the other hand, this effect may offset what initially appears to be a matching formula that would lead to ACP test difficulties.

[This message has been edited by MWeddell (edited 05-07-99).]