Do the rules of converting a regular 401(k) to a safe harbor 401(k) re

[Archimage]

Do the rules of converting a regular 401(k) to a safe harbor 401(k) regarding when you can convert apply to SARSEPs?

[Appleby]

Sorry Archimage- I am a little lost.

What would you be converting the SARSEP to?

Are you referring to the notification requirements?

[Archimage]

I just read my last post and it makes no sense to me either.

Yes, I am talking about converting a SARSEP to a 401(k) Safe Harbor and the notice requirements that state if you convert a regular 401k to a SH 401k you have to give the notice out before the beginning of the plan year. Does this rule apply to SARSEPs?

[Appleby]

One of those days huh

No it doesn’t .

Note that a SARSEP cannot be converted to a qualified plan (including a 401(k) plan.). However, assets can be rolled over from a SARSEP to a 401(k) plan, if the plan and the employer so allows.

Given that this safe harbor plan will be a new 401(k) plan, the January 1 date does not apply.

With respect to terminating the SARSEP, the employer should notify the SARSEP participants that the plan will be terminated… I need to check on whether or not this notification needs to be provided before the beginning of the year- since it involves salary deferral contributions, or even if it is mandatory. I will get back to you on that…

[MJ Hartman]

I posted a question on sarseps rolling into a 401k plan before: is this considered a related rollover? should I be looking for top heavy consideration of key ee's $ being transferred from a sarsep into a new qualified plan? or is this just a hybrid IRA account that dosen't count? thanks.

[Appleby]

Archimage

…as a matter of courtesy, the employer may provide written notification to employees that he/she will no longer be making contributions to the SARSEP. For the salary deferral portion, a formal termination is required. These amendments may be made at any time providing they are made prospectively.

[Archimage]

Thanks for the info. I was surprised to see one of these things actually still existed.