I have seen discussion on using a non-414(s) safe harbor definition of compensation for deferrals then testing the ADP with a safe harbor definition. I have not seen anyone talk about the same with matching contributions and the ACP test.

I have a plan that uses a safe harbor definition for deferrals, but a non-safe harbor for matching contributions (W-2 compensation plus overtime, less bonuses). Can I use the same theory to decide that since the plan passes the ACP with a safe harbor definition, the plan is okay as long as I file for a determination letter disclosing all of this on Demo 3 or Demo 9? How do I pass the nondiscrimnatory availability requirements?

Yes, it's the same story as using a non-414(s) definition of compensation for elective deferrals. See the Supplementary Information to the 414(s) regulations, comment #7, 54 Federal Register 7659, reprinted in CCH Pension Plan Guide, paragraph 23,836F (9/12/1991). See also Q&A 40 from the 1992 Enrolled Actuaries Meeting gray book if you've got access to that. It basically says don't worry about the potential 1.401(a)(4)-4 violation if the only reason is that the employee contributions, elective deferrals, or matching contributions are using a non-414(s) definition of compensation unless the compensation definition clearly restricts access for nonhighly compensated employees.

When you refer to the non-414(s) safe harbor definition of compensation ... do you include the taxable portion of group term life insurance in excess of $50,000 or reduce compensation by that amount becaiuse it represents a "welfare benefit"?

Let me restate this post!!!! When you use the 1.414(s)-1©(3)alternative safe harbor definition of compensation ... do you include the taxable portion of group term life insurance in excess of $50,000 or reduce 415©(3) compensation by that amount because it is treated as a "welfare benefit"?