PensionNewbee Posted January 30, 2004 Posted January 30, 2004 a client adopted the 3% safe harbor in 2002. For 2003, the client made the 3% contribution, but the safe harbor notice referenced the safe harbor match. The intent of the client for 2003 was to make the 3% contribution. Are they stuck with the match formula because that's what the notice said or can they allocate the 3% safe harbor?
Archimage Posted January 30, 2004 Posted January 30, 2004 I'd say they are stuck. I would even go a little further. Some plan documents actually spell out exactly how the safe harbor is to be met. If it says the plan sponsor will actually do a 3% SHNEC then I think you lose safe harbor status completely for 2004.
PensionNewbee Posted January 30, 2004 Author Posted January 30, 2004 Not that I am a doubting Thomas, but do you have anything more substantial than an opinion? Is there a cite?
Archimage Posted January 30, 2004 Posted January 30, 2004 Notice 98-52 specifically states "the safe harbor matching or nonelective contribution formula used under the plan (including a description of the levels of matching contributions, if any, available under the plan." You have specifically stated that the safe harbor status is 3% of compensation. You have not stated that you will use a match. You cannot issue a new notice due to the timing requirement of notice 98-52. As for my comments regarding the language in the plan doc, you must follow the terms of the plan doc.
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