A potential client wants to setup their prevailing wage plan so that the prevailing wage contribution offsets the safe harbor match and the profit sharing contributions. The profit sharing formula would be new comparability.

Our volume submitter document can handle this setup, but I have a question about how the offsets affects the rate-group test.

The prevailing wage contribution is a nonelective contribution, so typically I would include it in the rate-group test.
But if the prevailing wage contribution offsets the safe harbor match, should I include the portion of the prevailing wage that offset the safe harbor match in the rate-group test?

The entire prevailing wage contribution would still be a nonelective contribution and deposited in the prevailing wage source, not the safe harbor match source.

Thank you in advance for your help.

I would not use the Safe Harbor match for this purpose, regardless of the offsetting provision in the Plan Document. Employer Match contributions are not nonelective contributions, and would only be used in the Average Benefits Test, where required.