How do we set up a new safe harbor plan for 1999 after 3/1/99?

[Lynn Campbell]

What do I do if a potential new client decides 4/1/99 to set up a new 401(k) plan and wants to use safe harbor provisions? Does the fact that notice was not given by 3/1/99 preclude the possibility of such a plan for the calendar year 99?

[Guest EDSAADE]

See IRS Notice 98-52 Section X.

"A plan will fail to satisfy the ADP test safe harbor or the ACP test safe harbor for a plan year unless (i)the plan year is 12 months long or (ii) in the case of the first plan year of a newly established plan (other than a successor plan), the plan year is at least 3 months long(or, any shorter period in the case of a newly established employer that establishes the plan as soon as administratively feasible after the employer comes into existence)."

I would issue notice by 4/1/99 and established a short plan year 5/1/99-12/31/99.

[This message has been edited by EDSAADE (edited 03-02-99).]

[Guest GG]

good one ed ! i taught you well !