Switching from safe harbor to non-safe harbor in prospective plan year...

[jaemmons]

If a client amends their plan to remove the safe-harbor language for a prospective plan year, when can they switch to "prior" year testing?

Since the plan must default to current year testing while a safe harbor 401(k), does this automatically "lock" them in for the five-year period, whereby they would need to submit for an approval letter to utilize prior year testing?

Any thoughts????

[Archimage]

I would say yes, this does lock them into the five year period. There are not specific regs on this subject other than the regs concerning switching from prior to current year. Since these are the only regs I would rely on these regs as the authority for this conclusion.