Employer has two matching "levels". One group of employees receives no match while the remaining employees receive match of 100% of deferrals up to 4% of comp. My first thought was to test this for coverage using the theory that these are separate "tiers" of matching and would need b/r/f testing. In this case, 17 of 19 HCEs are in the group that receive no match. I easily pass 70% for the zero match and the 100% match. The more I think about this however, I'm not sure this is correct. If the other two HCEs were in this group such that no HCEs benefited from a match and fewer of the NHCEs were in this "no match" group (moved to the receive a match group), they would fail ratio percentage test. If they go on and pass nondiscriminatory classification test, I should be ok, right?

If for some reason, they fail this test, would I have a situation where the Plan design is not qualified? Doesn't seem right since the situation is one in which all the HCEs are receiving the zero match. There are other NHCEs also, however, who don't receive a match.

Maybe I'm overthinking this and getting myself confused.

It is hard to grasp with a 0% match, but everybody gets at least the lower match 0%, so everyone is in that group and you pass, not fail.

That gets my vote. You need to test for coverage under 410(b) and for nondiscrimination under 401(m).

So you are telling me that in the case of this match situation I don't need to test for BRF at all. Just the usual 410(b) and 401(m)?

Right. Unless you have two different ones. If some get something and some don't, then some who don't don't have anything to test for.

The BRF test is nothing more than a simplified coverage test anyways. If your group that gets the match passes 410(b), it passes BRF because that is in fact the same test, albeit much easier to pass.