Safe Harbor 401(k) with New Comparability feature

[Guest EPS2]

I have a Safe Harbor 401(k) plan that also has a new comparability allocation provision

ER doesn't know whether they will make a 3% non elective SH or the basic match.

It is my understanding that the "maybe notice" serves as a notice letting the employees know that the ER may elect into safe harbor status.

This is used when the ER doesn't know whether it will elect safe harbor status...not when the employer can't make up it's mind between a SH match or the SH 3% non-elective. Right?

If the ER uses the "maybe notice"...the safe harbor contribution (if the ER decides to elect Safe Harbor) will be the 3% non-elective. The ER cannot decide to do a SH match mid year...right?

If the ER does decide to elect safe harbor, then the supplemental notice must be given to EEs no later than 30 days before the end of the plan year, and the plan must be amended as such.

This stuff confuses me...I just want to make sure I am understanding what I am reading.

[Jim Chad]

FWIW I think you are right on. The maybe notice only refers to the 3% SHNEC. The employees have to be notified of the match safe harbor before the beginning of the year.

[Tom Poje]

to clear the confusion, a plan MUST MUST MUST MUST be operated according to the terms of the document.

if you don't have safe harbor language you are not safe harbor.

thus, as a general rule, the language MUST be in place before the plan year begins.

the only exception is the 3% SHNEC, in that case, you can issue a maybe notice 30 days before the year begins, and then amend the plan 30 datys before plan year ends if the plan will be safe harbor.

the safe harbor MUST be for 12 months, the only exception is for a new plan, a new plan feature (e.g. adding a 401k to an existing plan) or a short plan year.