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Notice 2024-02 describes several situations involving plan mergers and indicates that if the surviving plan includes a pre-enactment qualified CODA, then the plan is not subject to the automatic enrollment mandate. In this case there is no plan merger, simply another adopting employer. So it seems to me that since there is only one plan involved, and that plan includes a pre-enactment qualified CODA, that the plan is not subject to the automatic enrollment mandate.

I think I'd strongly recommend that the company get affirmative 0% elections or at least a something signed that eligible employees received the safe harbor notice, SPD and other notices. But yes as others have said if everything is on the up and up and simply no NHCE choose to defer, you get the TH exemption if you meet the rules which it sounds like you do.

Is everyone who is eligible to defer (regardless of whether or not they elected to) also eligible to receive the safe harbor match? In other words, is the eligibility the same for deferrals and safe harbor match? Or do they have (for example) immediate eligibility for deferrals, but 1 year of service for match? If everyone who could defer would be eligible to receive the match if they deferred, then you are good on the top heavy exemption. However if there is anyone who is eligible to defer but not covered by the match then the plan is not exempt from top heavy, even if no contributions other than deferrals and safe harbor match are actually made. However however if the only employees who are eligible to defer but not receive a match are long-term part-time employees (who are eligible solely because they met the LTPT eligibility criteria) then the plan retains its safe harbor top heavy exemption.

Bri's answer is absolutely correct. That's always been a fundamental coverage exclusion rule. In the plan document exclude non-resident aliens with no US source income. Then make sure you document the excluded employees, which can be tricky if you are talking about a large group of potential exclusions. Regarding the comment on Fidelity. " . . . one would think they know what they're talking about when it comes to 401ks" One might think so, but one would be wrong. Same with Vanguard and the other biggies in the game. Their business is investing assets, not in providing legal advice. It may also be that Fidelity (and the others) don't want to get involved with plans that have other than "routine" situations -- they may conclude that the risk isn't worth it for the money they'd make. I speak from experience.

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Of Internal Revenue Code § 414A and SECURE 2022 § 101, many interpretations are possible. Miscellaneous Changes Under the SECURE 2.0 Act of 2022, Notice 2024-2, 2024–2 I.R.B. 316 (Jan. 8, 2024), at its part II.A, describes some partial interpretations; but none that addresses your question. https://www.irs.gov/pub/irs-irbs/irb24-02.pdf While an employer might like C.B. Zeller’s reasoning, here’s the practical question: How much confidence does your client need or want? How much lack of confidence would your client tolerate? This is not advice to anyone.

Let's assume as Peter notes that participant self-certification is not available. Generally, taking a hardship withdrawal to make loan repayments such as for delinquent mortgages (with the threat of eviction) financially does more harm than good. The withdrawal is taxable and often triggers the early distribution excise tax. Student loan provider haves many alternatives available to help individuals who have difficulty making loan repayments. It would be in the better interests of the participant to encourage them to pursue those alternatives before tapping into the plan. Student loans commonly are written for expenses for an upcoming academic year. It is not uncommon for an individual to have multiple loans that may be consolidated later. An administrator who is parsing the safe harbor language could conclude that a student loan repayment on a loan for a prior academic year does not meet the requirement that the hardship is for an expense associated with the next 12 months of expenses. It also is notable that paying off credit card debt by itself is not a safe harbor hardship reason, but having sufficient available credit on a credit card to cover a heavy and immediate financial need is a reason to deny a hardship. This quirk merely highlights that the safe harbor hardships are not intended to be a universal solutions for relieving debt.

NEVER believe anything anyone at Fidelity, Vanguard, Merrill Lynch, or any insurance company platform tells you. They are almost always wrong! If you really want to go with Fidelity, you have to work your way up the representative chain. Start by immediately asking (nicely) to speak to a supervisor and start from there. Eventually, you might get to someone who actually knows something....

sounds right, aside from the usual caveats (like I pretend you would have deliberately omitted whether there was a profit sharing component to this as well, or if there's no real way to prove the employees actually chose their 0% rates)

I am in fact scheduled to review their Powerpoint presentation to potential new MEP members after 10/16, and this was near the top of my list to make sure was in there.

Great comments. To expand on Peter's comments, consider an example where there is a natural disaster (eg, tornado, hurricane) that interferes with the employer's normal business operations. Governing agencies (IRS, DOL, PBGC) have a long history of providing "disaster relief". One of the foundations of that relief is phrases such as the underlined one above. Thus, the safe harbor described above is not the only method of compliance.

What does the Plan Document say about distributions to non-spouse beneficiaries and their options?