austin3515

OK this is coming up again for me and I cannot find any guidance on point whatsoever. 457f plan has an SRF that expires in 2035. Client wants to know what happens if non-profit ceases operations in 2030 and they want to terminate the plan. Does the participant vest and get paid out or forfeit? The Basic Plan Document does NOT say the participant becomes vested on termination, nor does any provision in the AA. Would I need to add a special vesting event that says something like "In the event the plan is terminated in connection with the Organizations intentions to completely cease operations"?

probably you're talking about Dr. Evil...

Also True, LOL.

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I think the issue with not doing the safe harbor notice is that if you don't have the "maybe not" language you can't discontinue it mid-year unless you are operating at an economic loss. According to the ERISApedia text book it's a little gray, but I still send them out for this reason.

And the relevant fact and circumstance in my 4% SHNEC example is that everyone gets the same or more from their employer.

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!

Definitely aggressive to make this change after the notice goes out since participants were eligible for a 4% match and now they will only get 3%. I'll be there will be a lively discussion as to whether or not this can be done. If you want to be lock tight, you could do a 4% SH Nonelective. If you did that, you have no harm no foul every which way you turn and I would have no problem with this change. If you are doing this to max out an owner you would likely be doing a Gateway minimum that is greater than 4% anyway. I don't know if the following will be possible or not, but I would suggest a short plan year from say 1/1/2026 to 3/31/2026. Then have your 3% SHNEC start 4/1/2026 and remain on a 3/31 plan year for a while. If you are trying to max out a calendar year tax payer in 2026, then this probably doesn't work.

Maybe top-paid group would help?

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.

Yes absolutely. You can do anything for just NHCE's pretty much, such as profit sharing of varying rates.

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).

https://www.plansponsor.com/blines-ask-experts-410b-coverage-testing-firms-401k-403b/ I had a few minutes before I am heading out for dinner :). This should help!

I had this scenario and had them set up a safe harbor match plan for this reason. There is a special rule about coverage testing for the match for 403bs and 401ks,. Someone else might be able to tell you the site, but there is something so make sure you find it!

I;ve already done all of the above, LOL . But it did occur to me that someone would put something out there.