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Geeze, you had to ruin my Friday afternoon by bringing up that letter? (Where is that head banging smiley face when I need it?) ASPPA actually recommends changing the standard for prohibited mid-year amendments to amendments that would affect wording in the safe harbor notice. And all this time I thought they were working FOR us. If you make it to section IV, you will see them asking the IRS to confirm that amending to change the employer's address or phone number or to replace a Trustee are not prohibited mid-year. After speaker comments at the 2012 annual conference that it was ridiculous to think anyone with ASPPA ever said you couldn't change an address, phone number or Trustee mid-year, I thought that issue was laid to rest. Those of us who were around when safe harbor 401(k) first became an option should remember that at one point the IRS actually made rule changes with the stated goal of making it easier for employers to adopt and administer safe harbor 401(k)s and to ecourage them to adopt these plans. I'm referring in particular to Notice 2000-3. Those changes were incorporated into the final regs. How in the world did we get from that to having ASPPA asking the IRS to impose a huge disadvantage on SH plans? (Rant mode off)

SIMPLE IRA investment accounts can certainly be moved with the consent/directions from the participant even if the SIMPLE is with a DFI. If the transfer is being made before the account is 24 months old OR the new account is going to accept future SIMPLE contributions then you need to move to a new SIMPLE IRA (use IRS Form 5305-S or functional equivalent). If the partiicpant just wants to move the current balance AND the accunt is at least 24 months old they can rollover to a traditional IRA.

Provisions that might have an effect on participants' decisions to defer is an impossible standard to determine. I recently came across a discussion in the EOB that I think applies here. The discussion is regarding the Gold memos dealing with abusive 401(a)(4) designs. Sal questions whether the IRS has exceeded its authority on the issue and points out that even under their regulatory authority, the Administrative Procedures Act requires proposed regulations and a public comment period before rule changes can be made. The regulations 1.401(k)-3 and 1.401(m)-3 are very clear about the types of amendments that can not be made to safe harbor plans mid-year. If the IRS wants change that to prohibit virtually all amendments to SH plans, there are rules and procedures for them to follow when making changes.

Applying logic to analyze the IRS position? Maybe that should be posted in humor?