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401(k) safe harbor nonelective


Belgarath
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I'm very new to Relius, so apologies for foolish questions.

So, let's say you have a 401(k) that wants to use the "maybe" election in 29(e)(2) of the adoption agreement. Then, in a timely fashion of course, they decide they do want to amend the plan to provide for the 3% safe harbor contribution. My question is this: does the amendment wording provide for something to the effect that "this amendment to provide the 3% safe harbor non-elective contribution is effective for the plan year beginning 1/1/2012 and ending on 12/31/2012. For 2013 the plan will automatically rever to the the Discretionary ("maybe") election in Section 29(e)(2) of the adoption agreement, and will remain so unless and until changed by any further amendment" - or something to that general effect. In other words, 1.401(k)-3(f)(1) clearly pwermits such an amendment to be for one plan year only. But does the Relius document permit this? If not, then it is a real bore to have to amend in and back out of safe harbor status year by year, rather than only having to amend in.

Thanks - I appreciate any responses.

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but that is ultimately the whole point of 'maybe'.

1 month before the end of the plan year you either

1. issue a notice saying no we won't go safe harbor this year (so no amendment takes place)

a. include a new notice saying might go safe harbor next year

or

b. give up on safe harbor and do nothing more.

or

2. issue a notice saying yes we ar safe harbor.

a. amend plan for that year only and include notice saying might go safe harbor next year

or

b. amend plan tp be safe harbor until further notice, and issue notice saying plan will be safe harbor next year.

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Thanks to both of you. So I guess the heart of my question is: does Relius have or produce, when amending via its amendment module, standardized amendment language so that the amendment is for 1 year only and automatically reverts back to "maybe" for the following year, or must I just draft some customized basic language that accomplishes this? So that as Jim suggests, one amendment amends "in and out" - "in" to safe harbor for 2012 and "out" of safe harbor for 2013?

As an aside, does this "in and out" amendment mess up prototype status? It shouldn't, as amending out of safe harbor and back into it are both permitted elections in the Adoption Agreement. But does the IRS have a problem with the "in and out" on one amendment, or do they want to see two separate amendments? The plan in question that raised this issue is a prototype, and not a VS.

Gracias.

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