Safe Harbor 401(k) Cross-Tested Plan Design

One of the most attractive plan designs is a safe harbor 401(k) cross-tested plan. However, the plan must be designed carefully to ensure that safe harbor and cross-tested rules are implemented properly. SunGard Relius recently posted an FAQ that discusses some of the important issues which affect the plan design. These issues are addressed:

In applying "rate group" testing to the allocations (converted to equivalent benefit rates (EBRs)), what safe harbor contributions may the plan include in the test?
In addition to rate group testing, in what other tests does the plan use the safe harbor nonelective contributions?
In what tests does the plan use safe harbor matching contribution (including other matching contributions that satisfy the ACP safe harbor requirements)?
If an employer combined a traditional 401(k) plan with a cross-tested plan and th employer made a qualified nonelective contribution (QNEC) to satisfy the ADP test, would the plan include the QNEC in rate group testing? To satisfy the minimum gateway?
If a plan is using the average benefits test to demonstrate that the plan is nondiscriminatory under the general nondiscrimination test, must the plan use catch-up contributions in the test?

Please contact us with plan design questions for new or existing safe harbor 401(k) cross-tested plans.

Safe Harbor 401(k) Cross-Tested Plan Design

Types of Plans