Safe Harbor Notice, client wants to stop the plan.

[Guest JPAdmin]

Could someone provide some guidance on this issue?

I meet with a client and walked through the benefits of a safe harbor match. The client agreed. I delivered the notices to the participants and explained the plan. About a week later, the client called wanting to eliminate the plan. Deferrals have not yet been made. Can the plan be stopped? Thanks.

[wmyer]

This exact question is answered in IRS Notice 2000-3 Q-6. Yes, the plan can stop the Safe Harbor and discontinue the Match mid-year, but it must give 30 days notice prior to stopping the match; it must match deferrals up to the effective date of stopping the match; and it must pass the ADP and ACP tests for the full year using current year testing.

[Guest JPAdmin]

Precise and to the point of the question. This is just what I needed. Thank you.