Eliminating Safe Harbor Match

[R. Butler]

Plan sponsor decides today that they want to elimiate the safe harbor match in their clandar year plan. Safe Harbor Notices were provided for 2010 already. I know that generally plan sponsor must give a 30 day notice to eliminate. Is that true even if they want to eliminate prior to the beginning of the plan year? If we can amendment signed by 12/31 can plan sponsor eliminate match effective 01/01 or does it need to 01/31 at this point?

Thanks for any guidance.

[Bill Presson]

Plan sponsor decides today that they want to elimiate the safe harbor match in their clandar year plan. Safe Harbor Notices were provided for 2010 already. I know that generally plan sponsor must give a 30 day notice to eliminate. Is that true even if they want to eliminate prior to the beginning of the plan year? If we can amendment signed by 12/31 can plan sponsor eliminate match effective 01/01 or does it need to 01/31 at this point?

Thanks for any guidance.

Had the exact issue today. Here was the response from the attorney:

As a practical matter, it seems to be a reasonable approach to amend before 12/31 to completely eliminate the safe harbor match for 2010 and beyond until further amended. The regs dealing with suspension of safe harbor seem to deal with "during the year" suspension. This would be a "before the year begins" suspension. However, the regs do not address this particular question, and we are not making any recommendation or suggestion on what this client should do. We are not offering an opinion that it can or can not be done

This doesn't tell you much except that it would be an 'outside the lines' attempt.

We elected to just give the 30 days notice and match till the end of January.

[Tom Poje]

Bill's comments are right to the point - it is unclear.

remember though that the 30 days is deemed 'reasonable'. for example, if I had an office of 3 people and talked to each one seperately describing the elimination of the match, would that be termed unreasobale as far as those few employees making a decision? so I would also say it is a facts and circumstances issue as well.