Failure to distribute safe harbor notice

[Guest bjwesq]

What is the correction method for a safe harbor plan (safe harbor match) that failed to distribute a safe harbor notice for a prior plan year (discovered within the self-correction time period however) but the employer still made the safe harbor matching contribution for that year? Thanks.

[Guest ActuaryWannabe]

I think that since the required notice was not distributed, you do not have a safe harbor plan. You can use the 3% as a QNEC, but that is probably all you can do.

[jquazza]

I agree with Wannabe, you don't have a SH for that year and have to run the ADP/ACP.

Now, if the year in question is post GUST restatement, you may have a qualification issue (that was actually discussed at a Corbel seminar one of my colleague atteneded last year.)

As far as correction is concerned, you really have a problem as this is not discussed in EPCRS. The problem is not so much with ADP and ACP, but with the NHCEs who didn't defer and might have had they known about the SH contribution (especially if in the case of a match.) You may have to contribute a QNEC to all NHCES to bring them to the level where they would have maxed their match. At any rate, I would not do it without the Service approval.