Changes to Safe Harbor Match Formula

[Guest Cheri_Rose]

Can anyone direct me to anything that relates to procedure/dos/don'ts/etc regarding the changing of Safe Harbor match formulas?

Can you change mid-year? What about notice to participants?

[Guest Cheri_Rose]

Anyone? I'm looking through ERISA, and don't see anything about changing the formula mid-year.

One way I get what I'm looking for is the SH Notice that's req'd before the plan year begins...so you have to state what the formula will be. I'm just not sure about CHANGING the formula during the year.

My gut tells me that you can't just change a SH match formula just like that...but I'm having trouble finding where exactly it says so.

Anyone?

[Bob R]

There isn't anything out there that specifically addresses this. However, I don't think you can change it mid-year.

[blue]

I was at a Sungard safe harbor seminar last week and the following question was presented:

Amending a matching formula -

Company plan includes a basic safe harbor match and a fixed matching formula of 50% of deferrals not exceeding 6% of deferrals. However, toward the close of the plan year, the company amended the matching formula to increase the matching percentage 100 %.

Will the matching formula be subject to the ACP test?

The answer was yes if you are lucky. You may not add a match or increase rate of existing fixed match during the plan year. He further implied that you probably have a disqualifying event since the final 401(k) regulations say you cannot have ADP/ACP testing as a back up with safe harbor