Safe Harbor Notice Sponsor changes mind twice

[Guest nancy814]

Plan sponsor issued a maybe 3% Non Elective Safe Harbor Notice for 2010 Plan Year. Sponsor funded 3% for January 2010, then in February decided they couldn't afford contribution and issued a "No we're not going to be Safe Harbor notice". Plan is Top Heavy for 2010 and Sponsor did not realize top heavy implications and now wants to rescind their "No we're not" notice and be Safe Harbor for 2010. Can this be done???

Thanking you in advance for your help.

[Tom Poje]

if I understand your question, someone (plan sponsor) needs to be lashed with a wet noodle 30 times (one for each day of the required notice) but maybe since its Thanksgiving they can be let off the hook.

what you describe is next to impossible to have happened so I'm sure the 'actual' details will be figured out.

when a plan provides a 'maybe' notice, the plan itself is not a safe harbor, unless it is amended with 30 days of the plan year end to be, in fact, a safe harbor plan, and a notice is issued indicating such.

thus, while a 3% contribution 'may' have been made, it certainly isn't following any terms of the document unless the plan was actually amended to be a safe harbor.

ugh, what happens with that 3%, I've never seen, but then you have the following...

A notice was issued indicating the plan would not be safe harbor. the regs actually say if a plan issues a maybe notice

then 30 days before plan year end the plan will issue a notice indicating it will indeed be a safe harbor (I don't see anything in 1.401(k)-3(f)(2) and (3) that says the plan will issue a notice saying it chose not to be a safe harbor. so I guess that notice really makes sense(I must admit I sort of assumed that a non safe harbor notice would be issued or maybe I read that somewhere, but looking at the regs, I can't find such a thing)

so maybe the best thing to do is amend the plan to actually be a safe harbor (in some ways ignoring the follow-up notice which wasn't required in the first place). once amended, then the plan has to put the 3% in, so maybe the initial 3% is ok in around about way. (And the plan could be amended to be safe harbor only for the current year if so desired. and another maybe notice issued 30 days before plan year end.

[Guest nancy814]

Thank you so much!!! I will lash the sponsor with a wet noodle (great idea).

You look very cute in your outfit as well!!!