Safe Harbor Contributions to Non-Existent Plan

[Guest PJW]

Just wondering if anyone has any input on this issue regarding the flexibility in committing to make a safe harbor contribution (3% nonelective contribution). The plan sponsor has not yet decided on whether or not to make the safe habor contribution for 2002. They would like to provide the initial notice to the participants just in case they decide to go forward (please do not address the timing issue). If they decide to make the contribution next year, they would like the contribution to go to a plan that they are going to adopt in the first few weeks of 2002. Basically, I am wondering whether this is okay. I mean, if you are not committing to make the contribution to the current plan what difference should it make if you don't committ to making a contribution to a plan that hasn't been adopted yet?

Any input would be helpful. Thank you!

[Fred Payne]

There's such a thing as the "Maybe Notice." At the time one would normally give the Safe Harbor Notice, a Sponsor can state that they may or may not make a 3% non-elective contribution to qualify for the Safe Harbor. The Sponsor would have up until November 30 of the year in doubt to make a subsequent notice of its decision and make the Safe Harbor election effective for that entire year. The Maybe Notice only applies to the indecision about the 3% non-elective contribution and not as to a Basic or Enhanced match.

[Guest PJW]

Thanks for the response. My question does deal with the "maybe notice" but there is more to it. The question is whether it's okay to state in the "maybe notice" that the contribution will be made to a plan that does not yet exist (another profit sharing plan).