perkinsran Posted February 11, 2009 Posted February 11, 2009 Company currently has a 401k safe harbor with a 4% non-elective. Immediate eligibility. Questions have been asked regarding whether they can amend to make deferrals immediate, but Safe Harbor non elective only to those who have 1 year of service. Can this be done? and if so would it need to be done at the time of the Safe harbor notice ?
Tom Poje Posted February 11, 2009 Posted February 11, 2009 you have the option of not providing the safe harbor to otherwise excludable employees (though that would also cost you the 'top-heavy free' exemption as well). my understanding is that you can not change conditions mid-year.
perkinsran Posted February 11, 2009 Author Posted February 11, 2009 you have the option of not providing the safe harbor to otherwise excludable employees (though that would also cost you the 'top-heavy free' exemption as well).my understanding is that you can not change conditions mid-year.
perkinsran Posted February 11, 2009 Author Posted February 11, 2009 you have the option of not providing the safe harbor to otherwise excludable employees (though that would also cost you the 'top-heavy free' exemption as well).my understanding is that you can not change conditions mid-year. I understand that a change would not be made until next year, (if it can be done at all ) but can you make a change that would allow participants to enter the plan for elective deferrals immediately, with Safe harbor non-elective contribution for 1 year of service ?
Guest Sieve Posted February 11, 2009 Posted February 11, 2009 Tom already answered your question in the affirmative.
Kevin C Posted February 12, 2009 Posted February 12, 2009 Our EGTRRA volume submitter document allows the following choices for eligibility conditions on the SH contribution: The eligibility conditions applicable to salary deferrals. One year of service and age 21 with semi-annual entry dates. The eligibility conditions applicable to matching contributions. The eligibility conditions applicable to employer contributions. It also includes a note that you can not require more than one year of service. As you noted, you would have to amend before the beginning of next year and have the amendment effective on the first day of next year.
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