Safe Harbor Conversion

[Dougsbpc]

Have an existing 401(k) plan and wish to convert it to a Safe Harbor 401(k). If the employer wishes to make the basic match safe harbor (100% match up to 3% of pay plus 50% up to 5% of pay), do existing match accounts need to be 100% vested?

Clearly, future match contributions must be 100% vested, but what about existing match contribution accounts?

Thanks much

[WDIK]

It is my understanding that only the safe harbor contributions must be fully vested.

[jquazza]

WDIK is correct. You have to be careful about the timing of your amendment though, you can't decide to become safe harbor mid-year, just like that. Remain cognizant of the notice requirement etc... The sponsor will probably have to wait until next plan year.

[Guest bueler]

The existing match is not required to follow an immediate vesting schedule. Only future safe harbor contributions will follow the 100% immediate vesting.

If plan year is 12/31, safe harbor match can not be implemented until 1/1/05 due to the fact of the annual notice requirement.