URGENT! New Safe Harbor Plan Establishment Deadline

[Guest bariww]

I am aware that the deadline to implement a new safe harbor plan for single employer plans this year is Oct 1, but I'm wondering if there is any loophole or way around that? Would using the services of a Professional Employer Organization like Administaff for payroll, benefits, and 401(k) make any difference to when we could set up the plan? Thanks in advance.

[ERISAnut]

No work-arounds. They are what they are. Assuming the company already exists and does not actually start-up after October 1st. Generally speaking, these rules are too easy to meet without needing extra exceptions.

Hope this helps.

[GBurns]

You asked about single employer plans then you raise the issue of a PEO (which is a multiple employer plan).

Which are you conerned about and Why would you be concerned about the PEO's plan ?

[Guest bariww]

You asked about single employer plans then you raise the issue of a PEO (which is a multiple employer plan).

Which are you conerned about and Why would you be concerned about the PEO's plan ?

I just wanted to know if there was a way around the Oct 1 deadline if you went with a PEO and was unsure if the rules were different for mulit-employer plans but it sounds like they aren't...

[Guest Sieve]

There are limited work-arounds.

If you do not already have a 401(k) plan, you can establish an off-calendar year plan anytime--even after October 1. For example, you could start a safe harbor 401(k) plan as of November 1 with an 11/1-10/31 plan year--or with an intitial short year of 11/1-1/31. And, if you have an off-calendar year non-401(k) plan, you can amend it into a safe harbor 401(k) plan if it's done before the last quarter of the plan year. (See, generally, rules in Treas. Regs. Section 1.401(k)-3(e).)

I think you may be able to start a new off-calendar 401(k) Plan as a safe harbor even if you already maintain a 401(k) plan, but I'm not positive of that one and would have to look into it further.

[Guest bariww]

There are limited work-arounds.

If you do not already have a 401(k) plan, you can establish an off-calendar year plan anytime--even after October 1. For example, you could start a safe harbor 401(k) plan as of November 1 with an 11/1-10/30 plan year--or with an intitial short year of 11/1-1/31. And, if you have an off-calendar year non-401(k) plan, you can amend it into a safe harbor 401(k) plan if it's done before the last quarter of the plan year. (See, generally, rules in Treas. Regs. Section 1.401(k)-3(e).)

I think you may be able to start a new off-calendar 401(k) Plan as a safe harbor even if you already maintain a 401(k) plan, but I'm not positive of that one and would have to look into it further.

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My company does not have a plan in place, but want one if possible for this year. Can a PEO like Administaff help us with the type of plan that they offer?

[Guest Sieve]

I'd just go to a Fidelity, a TPA, or whoever, & get a prototype document. Don't think a PEO will help you if you aren't using PEO employees.

[Tom Poje]

since it is permissible to use 3% for the look back year for the initial 401k plan year, why not go that route (giving the HCEs 5% deferral rate) and then become safe harbor next year?

[Guest Sieve]

Because that will not permit a full $15,500 (or $20,500) for both calendar 2008 & calendar 2009 for HCEs. But, with a safe harbor established now with a 11/1/08-10/31/09 plan year, you can get the max for each year--and then you can go with a short year from 11/1-12/31/2009 and get back to a calendar year plan year as of 1/1/2010.