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Editing my initial answer since I misread the question . You are asking if you can amend the plan by 12/31/2025 for a 2026 change from SHM to SHNE? Technically, you can make the change at any point before the plan year starts. A question that could be asked is whether participants will have a reasonable time to make changes to their elections after you amend, and if they are negatively impacted by the change if they do not have reasonable time to change their elections. I think you are fine since you are providing the SHNEC in place of the SHM and participants will not miss out on any of the employer contributions even if they do not have enough time to change their elections for the first payroll. It would be different if you went from 3% SHNEC to 4% match and a participant did not have time to change their election to receive the full 4% match.

The ASPPA courses: Retirement Plan Fundamentals and Introduction to Retirement Plans are excellent. ERISApedia is also excellent, there are a lot of recorded webcasts on many different topics.

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.

Agree with Peter. But I know from experience that TIAA will not "treat that estate’s ultimate taker as if she were the plan’s beneficiary or at least a distributee". Also, this sounds like a non-ERISA 403(b), since the spouse is not the default beneficiary. If they are saying the estate is 50% beneficiary, they should be able to explain how and why they cam to that conclusion. Assuming they are right- she might be able to rollover any distribution (made to the estate), to her own IRA ( many PLRs have allowed such rollovers). In this case, it would be her treating herself as the distributee- but she must consult with her CPA or attorney with expertise in such rollovers before completing any such rollover. No- there is no such thing as a see-through estate. PS; the See-through trust would affect only the calculation and the option for rollover. Generally, rollovers are not permitted for estates, but the IRS have made exceptions in cases like the one you describe.

Happy Holidays from sunny Florida!

How about the amount that the State’s law counts as income? Or the amount that results from following the State’s law, regulations, guidance, or withholding instructions? Either of those might differ from either of the amounts you describe. And could vary for each State’s law. Under (at least) Alabama’s, New Jersey’s, and Pennsylvania’s law, withholding might vary regarding the portion of a distribution that (if not excluded as old-age retirement income) is treated as a return of previously taxed income. Under Pennsylvania’s law, old-age retirement income is excluded from income. Under New York’s law, some kinds of retirement income might be excluded from income, up to a limited amount. This is not advice to anyone. If my response is a winner, please send my cookie to the Bakers.

State withholding is determined by state law and can vary from state to state. I know some states essentially adopted the federal tax code with respect to definitions, e.g. wages and gross income, and I suspect most states do. How many cookies do you available to award?

Give me a call. I know a guy who can help someone or something 'disappear' 😉

I may or may not have seen some of these manually signed documents due to "issues with electronic signature software" and other similar explanations.

Targeted bottom-up QNECs to the ACP test with those rules. Sounds fun enough.

Now that service providers use electronic-signature regimes, have plan sponsors invented new explanations about why a signature was not received before year-turn?

Maybe top-paid group would help?

I have a large law firm client that recently asked about mega backdoor Roth and voluntary after-tax contributions in general. I explained the ACP test issue and after a slight pause, one of the partners said, "but that can be resolved by making a company contribution instead of refunds, right?" They are actually considering corrective QMACs to let their highly paid (and, coincidentally, HPI) participants do this. Sure, it works mathematically if they don't mind spending the money, but I have to wonder if it will really work out better than adjusting their class-based profit sharing.

I will also add that allowing after-tax and Roth could be making it easy for employees to do something stupid, like contribute after-tax contributions without first maxing out their Roth 401(k). That's probably the most obvious issue with adding after-tax contributions in general.

We work primarily with larger plans that are unlikely to be designed as safe harbor--but that in general, don't need safe harbor protection, because a generous match encourages participation and the ACP test is passed easily. We typically see approximately 10% of a large plan population using the mega backdoor Roth feature--perhaps a couple of hundred individuals in a 2,000 participant plan (typical for our clients). That's enough to slightly degrade the ACP test results (because most using mega backdoor Roth are HCEs) but not enough to cause the ACP to fail. The bigger issue that we see occasionally is 415 limit violations, if someone miscalculates benefits or compensation and the aggregate limit for deferrals, match and after tax exceeds the DC 415 limit. We see a handful of 415 limit violations annually on our larger plans with this feature--I'd approximate the number as about 5 per 10,000 eligible, or 1,000 using the feature. So 415 limit violations are not common, but they do happen.

Happy Holidays from Alabama everyone!!

I have had it where it was an NHCE who wanted to do it. It was a married couple, and the NHCE was married to someone who made a gazillion dollars so they were looking to contribute the full 415 limit. And the plan sponsor was willing to accommodate (small employer).

By all means, if you can borrow at 5.5% and get a guaranteed return of 10%, do it. There are no risks: - lose your job? No risk there. - default of your family member's business? No risk there. - mis-estimate of your 10% return assumption? No risk there. - loss of diversification in your investments? No risk there. - risk of family alienation? No risk there.

Forget the SEP. Anything you can contribute to a plan that is NOT the DB plan can be contributed to the PS/401(k) plan. If you are NOT contributing the DB plan for the year, your contribution to the PS plan can be greater than 6%. You really need to have this discussion with the entity that helps you with your PS/401(k) plan. They should know the rules and be willing to discuss them with you.