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Its likely that no notice is required at all for the SHNEC, so really the only issue is that some participants may have changed their elections for 1/1/26 to get the full match. I could see an argument that they should have a reasonable time to change it less if they want to, but I don't think that is a facts and circumstances argument against the SHNEC. They may defer more in the first pay period than they would have if they had not received a SHN with 4% match. From a compliance perspective, I think they are ok. They may have some upset employees/participants, though.

Fromt he IRS website: General rule: Generally, the safe harbor notice must be provided within a reasonable period before the beginning of the plan year. The timing requirement is deemed to be satisfied if the notice is provided at least 30 days (and not more than 90 days) before the beginning of each plan year. If the notice is not provided within this time frame, whether the notice is timely depends upon all of the relevant facts and circumstances. (Emphasis Mine)

Thanks everyone. I really like austin3515's suggestion to go with the 4% SHNE. We are possibly adding a Cash Balance Plan and the gateway will be at least 7.5%.

So I think the analysis here is, there is lots of guidance in 2016-16 on mid-year changes to Safe Harbor plans but NOTHING at all regarding amendments made before the beginning of the year, regardless of whether the SH Notice has been distributed or not (I spent some time looking this morning out of curiosity). Switching from match to SH Nonelective is not a "protected benefit" issue. The employer can change its approach before the plan year starts. From an optics perspective with employees (And who knows, maybe one day the IRS) it just looks really bad, since you just told them you were going to give them 4% (assuming they contribute enough of course). But of course this is not an HR / Employee relations forum!

And Denise Appleby has tireless experience in helping people get the most that can be gotten from the recordkeepers, insurers, and custodians.