Exiting Safe Harbor 401(k)

[mariemonroe]

I know it is possible to exit a safe harbor matching 401(k) plan mid-year by complying with 1.401(m)-3(h).

Does anyone know if it is possible to exit a safe harbor 401(k) plan with a 3% nonelective contribution duirng a plan year?

[Jim Chad]

Notice 2000-3 says you cannot stop the 3% SHNEC mid year except for certain business acquisitions and termination of entire Plan. If the 401(k) portionis continuing or there is a successor plan, you cannot stop midyear.

[Tom Poje]

the answer is unclear.

Notice 2000-3 was written before the new 401k regs.

at the 2005 ASPPA conference, Q and A #12, the IRS said you could probably follow the same rules as for a safe harbor match.

though one must rememnber that such responses do not necessarily represent an actual position of the IRS.

I believe in other instances they said the company really should have issued a 'maybe' safe habor as that would prevent the problem from arising.