May a basic safe harbor matching contribution satisfy the ADP test?
Rev. 10/05/07, E-mail Alert 2007-13

A plan that currently satisfies the safe harbor 401(k) requirements with a basic safe harbor matching contribution formula automatically satisfies the ADP test. It may also be used to satisfy the ACP test on an additional discretionary match if the discretionary matching formula does not match on deferrals in excess of 6% of compensation, and if the total discretionary match does not exceed 4% of compensation. If the discretionary match exceeds either the 6% of compensation deferral limit or the total 4% compensation limit, then the employer must run the ACP test but has the option to either test all the matching contributions or just the matching contributions that exceeded the limit. Also, since the imposition of the final 401(k) regulations, there can be no hours of service or last-day requirement to be eligible to receive the discretionary matching contribution, if the safe harbor is to be applicable.