Looking at possibly taking over a Plan and after reviewing their current document have a question -

Plan was amended to become Safe Harbor effective 1-1-09. The document uses the Enhanced Match of 100% of first 4% for the NHCEEs.

The document also states the "Safe Harbor" Match for the HCEEs will be 100% of the first 3%. That formula obviously doesn't meet the minimum for a Safe Harnbor contribution and I understand the HCEEs aren't required even to receive a S-H contribution in order for the Plan to be S-H and the S-H minimums are what the NHCEEs must receive.

But would this Match to the HCEEs be considered a S-H contribution and exempt the Plan from ACP? Or would this Match to HCEEs have to be tested under ACP - obvious failure. Would the S-H Match made to the NHCEEs and the Match made to HCEEs be taken together to see if (a)(4) is satisfied?

As you said, only the NHCE's are required to receive the SH contribution. If the HCE's receive the SH match, their match has to meet the restrictions in 1.401(m)-3(d). In this case, it does. As long as something else doesn't mess up their SH status, I think they would be SH.

Thanks.

So even though the Match the HCEEs receive is not in a "safe harbor" amount, the HCEE match does not have to be tested under ACP? And since the rate of match isn't greater than what the NHCEEs receive (S-H Match), there is no (a)(4) issue?

And the entire plan can be viewed as a "Safe Harbor" plan and exempt from top heavy as well (provided no other provision precludes the t-h exemption)?

I agree with Kevin C. There are no anti-discrimination rules protecting HCEs. Not that I'm aware of.

I guess the question I still have is, since the 3% Match to the HCEEs doesn't satisfy 401(k)(12) safe harbor minimum, how can it be considered a safe harbor contribution (at least that's what it's called in their current document)? And if not, would it have to be tested under ACP? And since that would be the only Match in the ACP (i.e., HCEE Match) wouldn't that pose a problem?

I have no idea why the plan document would call the different match made to the HCEs a "safe harbor" contribution. It clearly does not meet the safe harbor requirement. However, I don't think it matters because only the NHCEs have to receive the minimum in order for the plan to satisfy the ADP safe harbor.

In order to avoid the ACP test:

1. ADP safe harbor must be satisfied. DONE
2. Matching contributions cannot be based on compensation in excess of 6% of compensation. DONE
3. Discretionary matching contributions cannot exceed 4% of compensation. DONE
4. Rate of match for HCEs must not be greater than the rate of match for any NHCE. DONE

In my opinion no ACP test would be required.

P.S. Even if the ACP test was required, you have the option of testing all of the match, not just the match that did not meet the ACP safe harbor requirements.