Safe Harbor 401(k) Examples September 3, 2004 |
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The Plan's Allocations
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Testing or No Testing
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Comments/Other |
Plan 1 |
No ADP Test No ACP Test Exempt from Top-Heavy Test |
NA |
Plan 2 |
No ADP Test No ACP Test Exempt from Top-Heavy Test |
NA |
| Plan 3 Elective Deferrals — No Limit SH Match — Basic Formula Discretionary Employer — 2% |
No ADP Test No ACP Test Top-Heavy Test Required |
Only a safe harbor plan with no employer allocations is exempt from the top heavy test. |
| Plan 4 Elective Deferrals No Limit SH Match — Basic Formula Forfeiture Allocation Contribution |
No ADP Test No ACP Test Top-Heavy Test Required |
Only a safe harbor plan with no employer allocations is exempt from the top heavy test. Even a forfeiture allocation is considered an employer allocation. |
Plan 5 |
No ADP Test No ACP Test Exempt from Top-Heavy Test |
Safe Harbor 3% NEC also satisfies the ACP Test provided matching is not made in excess of 4% of compensation and provided the matching is not made on deferrals above 6%. |
| Plan 6 Elective Deferrals — 40% Limit SH Enhanced Match — $/$ to 5% Discretionary Match — 50%/$ to 5% |
No ADP Test No ACP Test Exempt from Top-Heavy Test |
The discretionary match need not be tested provided it does not provide more than 4% in compensation and provided it does not match deferrals over 6%. |
| Plan 7 Elective Deferrals — No Limit SH Nonelective — 3% Discretionary Match — 25%/$ to 8% |
No ADP Test ACP Test Required Top-Heavy Test Required |
The discretionary match exceeded the 6% deferral limit which would not allow the ACP safe harbor to be satisfied and thus requires testing. |
| Check out our 401(k) Safe Harbor Chart and Our 401(k) Safe Harbor Page | ||
| Return to Safe Harbor 401(k) & Safe Harbor 401(k) Top Heavy FAQs | ||