Is there any problem with the following situation:

Floor Offset arrangement with DB benefits offset by actuarial eqivalent of employer contributions to a profit sharing/401(k) plan, where the sole employer contributions to the dc plan are safe harbor non-elective (3% contributions) used to automatically satisfy the ADP test.

I guess the more precise question is whether such an arrangement could qualify as a safe harbor under 1.401(a)(4)(8)(d).

Anybody see a problem using the 3% SHNEC contribution towards the safe harbor?

Does 1.401(a)(4)-8(d)(1)(vii) cause you a problem?

I don't think so but I appreciate the feedback. It seems to me that the employer contribution would be a separate "plan" within this context.

In the worst case, the dc program could actually be two separate plans, one only deferrals and the other being only the 3% safe harbor contribution, because there is no requirement that the safe harbor be in the same "plan". It could be in a money purchase plan, for example.

This is probably not an issue for you, but if the 3% SHNEC is made for the NHCEs only, then you might want to consider whether Reg. 1.401(a)(26)-5(a)(2)(iii)(A)(2) causes you a problem?

The point is that for the DB part of the FOA to get by 401(a)(26), you usually need the exception under -5, but it's conditioned on a 3-part test, part 2 of which requires that everyone who is benefitting under the DB plan also benefit under the DC plan "on a reasonable and UNIFORM basis." So, if the HCEs are not getting the 3% SHNEC, that would seem to be a problem under the "uniform" requirement. If everyone is getting the 3%, this wouldn't seem to be a problem.

I've struggled with this on a somewhat similar design to the one you seem to be considering. Thought the above issue was strange at first, but seems more plausible if you look at the preamble to the 401(a)(26) regs.

I'd be curious about what you think.