Can existing 401(k) Plan be amended to include safe harbor provisions?

[smm]

Employer has a M/P 401(k) Plan since 1997. Assume that the plan has operated in accordance with the safe harbor provisions since 1999. Has provided a timely annual notice, given 3% nonelective contribution to the correct individuals, etc. The plan does not have a match. The plan has never been amended to include safe harbor provisions. Can the safe harbor provisions be retroactively included in the GUST restatement?

[austin3515]

My guess is no. A big part of the safe harbor provisions are notices to participants and without a time machine you'd have difficulty doing that retroactively.

I hope you've been running your ADP/ACP tests!. Although somehow I suspect that you're asking this question because they haven't been done (or worse, they're not passing)

There is of course no reason why you couldn't amend the document to be safe harbor next year. I do think the amendments can be effective part way through the year, but I defer to some of the Heavyweights on this message board for that one.

[2muchstress]

Under Notice 2000-3, and existing plan can be amended to add a safe harbor feature using the 3% non-elective contribution as late as 30 days before the end of the plan year. For this to happen, three things must occur:

1) the plan must use current year ADP testing method.

2) Notice must be given to the participants prior to the beginning of the plan year, that the plan MIGHT be amended during the year to a safe harbor plan,

3) a second notice must be given to participants 30 days before the end of the plan year notifying them that the plan was amended to allow for the safe harbor non-elective contribution.