Safe Harbor

[PMC]

3 Safe harbor questions -

1. Notice 2000-3 allows a plan using the safe harbor matching contribution to reduce or eliminate the matching contributions provided the proper notification is met and then test under ADP/ACP.

What if a plan is using an enhanced s-h match but wants to reduce it to the basic s-h match? Seems like if they can do the above, they could do this, provided proper notification is given?

2. S-H match can be made annually or on a payroll basis. Using a payroll basis can avoid the true-up situations as long as that basis is at least quarterly and the match made by the end of the following quarter.

What about a plan that makes the s-h match semi-annually? Is this O.K but they need to take into consideration true-ups at the end of the year?

3. Anyone seen any additional guidance re- corporate or plan mergers and s-h? For example an employer has a MPP and 401(k) and they use the MPP to satisfy s-h but want to merge the 2 plans mid-plan year and have the 401(k) provide the s-h contribution. Doesn't seem like participants would be harmed but the s-h Notice that was given for the plan year wouldn't be correct and would this invalidate s-h?

[MWeddell]

1. I agree that this is reasonable although not expressly covered by the IRS notices.

2. Yes, semi-annual match with true-ups can satisfy the safe harbor rules.

3. No additional guidance. Like you, I'd be comfortable with this change although the IRS notices do not expressly address this situation.