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safe harbor plans joining PEPs mid year


mattmc82

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With major recordkeepers announcing their PEP products this is going to be an instant question early on.

if a stand alone safe harbor plan wants to join a PEP, do you see any issue with that plan converting into the PEP and keeping safe harbor status (for as long as all provisions are identical)?

I know in the past i have heard of some payroll providers not really cooperating with these types of moves as well, requiring the plan to change providers prior to coverting.

thoughts?

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Given that the third party provider is changing, there will be a new call center phone number and a new website.  The safe harbor notice contents must include "How to make cash or deferred elections, including any administrative requirements that apply to such elections."  It seems likely to me that you'll have to provide an updated safe harbor notice at least 30 days before the crossover date but that this is a type of mid-year change that is permitted by IRS guidance.

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I don't see the point of joining a PEP mid-year if you have an ongoing plan. You don't lose the compliance and filing requirements for the year. You just end up having to do them at an unexpected time. 

Since recordkeepers can only do so many year end transitions, this may be  a complication for PEP plans going forward. 

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