Safe Harbor Notice Requirement

[Guest justbetmd]

If a safe harbor plan is frozen mid year - is a safe harbor notice required to state that the matching contributions are being discontinued? Please note that since the plan is being frozen - deferrals are being discontinued too - so there is not decision for a participant to make as to whether he or she wants to continue to defer into the plan. Since IRS Notice 2000-3 does not speak to termination or a frozen plan - I don't see how a notice would be required -- thoughts?

[four01kman]

I'm not quite sure how one "freezes" a safe harbor plan in mid-year. Unless what is meant, the plan is amended to not allow contributions (either employee or employer) for the remainder of the [year][for ever][?]

I understand the final 401k regulations to provide for matching for the [entire] year in which the safe harbor election has been made. But if in fact you can "stop" in mid-year, certainly a communication to employees would be required, not necesaryily a "safe harbor" notice (especially if the safe harbor provisions was being eliminated), but a notice regarding the cessation of benefit accruals and the elimination of matching contributions. It also seems to me the amendment (and collateral communication) would have to occur prior to the date on which everything stops.

[Kevin C]

1.401(k)-3(g) addresses the reduction or suspension of safe harbor contributions during the year. A notice is required.

If the plan is terminating instead of freezing, that is addressed in 1.401(k)-3(e)(4).