Existing P/S with Coda and Match Provision. Plan Fails ADP/ACP Refund

[Guest ROB VIDOVICH]

Based on the existing plan contribution information, it seems that this plan would be better off to amend the document to add the 3% Employer Non-Elective Safe Harbor Contributions to NHCE's and eliminate the existing match provision of 50% of the percentage deferred up to 10% of compensation(maximum def.%). If plan is amended, should the amendment be effective 3/1/2002 (2/28/ PYE)???????

Also, to maximize the contributions for HCE's amend the maximum deferral percentage from 10% to 15% or 20%..... The 3% Non-Elective Contribution would satisfy the Non-Discrimation Test and the 3% Top Heavy Minimum Contribution.

Please help me on this one............... Also, if anyone has a sample notice to participants regarding the addition of the safe harbor contribution methods if electing the matching or 3% non-elective method.. My email address is rvidovich@nebsonline.com.

[Archimage]

You are out of luck for this year. You have to notify your participants 30 days before the beginning of the plan year. However, it would be a great idea for 2003. I would recommend using the safe harbor match which will now satisfy the top heavy requirements just like the 3% nonelective.

I also recommend amending the plan to allow for a maximum of somewhere in the neighborhood of 75% max deferral percentage. This gives everyone the opportunity to defer as much as they like.

[Archimage]

Sorry, Rob. I missed the 2/28 plan year end piece. You can still go ahead as long as you get the notice out by the end of this month. I do recommend using the safe harbor match. You can apply it to the NHCEs or you can apply it to both NHCEs and HCEs. This match will satisfy the top heavy minimum for plan years beginning after 12/31/2001. If participants choose not to defer, that is there problem and the plan will be safe from the testing.

[Tom Poje]

the following is one version of the safe harbor notification.