New Safe Harbor Plan - 2005 - no prior plans

[Guest jetfaninmn]

I have a client that needs to put a Safe Harbor in place for this year and I know October 1 in the dropdead date for starting the plan. However, no 30 day has ever been given. Is it too late as of September 16th to implement this plan?

[Guest trumpy]

I seem to recall that there is an exception for plans that do not already have a 401(k) feature or are starting a new plan.

Not positive though.

[Guest jetfaninmn]

I thought that was the case, but I have been challenged on the point. I believed that if it was a new plan, as long as it was in place by 10/1 for a calendar year, we were good to go.

[Guest trumpy]

I just checked out the ERISA Outline Book and you are good as long as the 401(k) provision effective between now and 10/1.

[chris]

If I recall correctly, the 3 months deals with the requirement of there being a minimum 3 month short year in order for the safe harbor to apply unless it's a new entity that was created (that is sponsoring the plan...). The notice language in 98-52 can be read such that the latest date the notice can be given is Oct. 1 which is technically the date the e/ee's will become eligible for the safe harbor 401(k). Forgive me if I've garbled the details but I believe that is the gist of it. End result, you get the plan in place by Oct 1 and you hand out the notice on Oct.1 as well......

[Guest jetfaninmn]

Thanks to all!!

[Tom Poje]

why not just throw 1.401(k)-3(e)(2) of the final 401(k) regs at them. it is real clear

you can do this. the one exception being the sucessor plan rule - you did not indicate if the 'need for a safe harbor 401k' was because they recently terminated a 401k plan that was always failing.

[Guest jetfaninmn]

No sucessor plan, just HCE's who want to maximize. Thanks!