Which coverage test is the Safe Harbor Nonelective tested under?

The Safe Harbor Nonelective contribution is tested under the 401(a) coverage test. This is important because Section 401(a) of the Internal Revenue Code outlines the general qualification requirements for pension plans, including coverage requirements. Safe Harbor plans, which are designed to encourage employee participation and provide a level of protection for plan sponsors against discrimination testing, must adhere to these qualifications.

To comply with the 401(a) test, a retirement plan must cover a certain percentage of employees as well as ensure that the contributions satisfy specific nondiscrimination standards. The Safe Harbor Nonelective provision allows employers to contribute a set amount to all eligible employees, which can help to ensure that the plan meets these coverage and nondiscrimination requirements without the need for complex testing that is typically required under other provisions.

Understanding the context of the other options clarifies why they do not apply here. The 401(k) test predominantly focuses on deferral contributions and how they are allocated, while 401(m) pertains to actual contribution testing related to employee and employer contributions, and 402(g) involves contribution limits specific to individual elective deferrals. Therefore, the framework provided by 401(a) is pivotal in assessing the compliance of Safe Harbor contributions.