Timing of Safe-Harbor Notice for amended plan

[Guest PCS Inc]

We have a 401k Plan that previously had no HCE contributions, though the document specified prior-year testing. The client would like to restate the plan to Safe-Harbor status (using the non-elective contribution) for this year so the 2 owners can max out their 401k contributions for 2007. Can this restatement be done still for this year? Would the effective date be 1/1/07 or 10/1/07? When does the notice need to be distributed to participants by? Having trouble locating timing requirements for notice... all info we have found has addressed plans amended with "current-year" testing, not prior-year - does this really matter since no testing was ever required at all?

[WDIK]

For an existing 401(k) plan, the amendment to a safe harbor plan must take place before the beginning of the plan year. (In other words, you will have to wait until 1/1/2008.)

Notice must be given at least 30 days, but no more than 90 days, before the beginning of the plan year. I do not belive that current versus prior year testing has any impact in changing to a safe harbor 401(k) plan.

[401_4_ever]

The earliest this plan could go to safe harbor would be 2008.

[Sully]

Could set up a new Safe Harbor Plan effective 10/1/07 and then merge the 2 plans after the end of the year?

[WDIK]

Creative, but it will not be a newly established plan if it is a successor plan.

[Belgarath]

If they are really that desperate, I suppose they might consider amending the plan year on the current plan?

But, my experience with 401(k) plans using plan and tax years that don't match is generally unpleasant. We've had a few takeovers on these, and it is a royal PIA, and almost always leads to trouble.