Deadline for Ameidning to ADD Safe Harbor

[austin3515]

Under the remedial amendment period rules, you have until the last day of the plan year to amend a plan for a discretionary provision that is effective during that plan year. Since I am not required to be a safe harbor plan, the amendment must be discretionary.

Therefore, don't I have until February 28, 2012 to amend the plan to add safe harbor for the FEbruary 28 (29th?), 2012 Plan Year? The SH notice was sent out in min-January.

[austin3515]

Asked and answered

From §1.401(k)-3 Safe harbor requirements (2004 final regulations): (e) Plan year requirement (1) General rule. Except as provided in this paragraph (e) or in paragraph (f) of this section, a plan will fail to satisfy the requirements of section 401(k)(12) and this section unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year and remain in effect for an entire 12-month plan year. In addition, except as provided in paragraph (g) of this section, a plan which includes provisions that satisfy the rules of this section will not satisfy the requirements of §1.401(k)-1(b) if it is amended to change such provisions for that plan year. Moreover, if, as described under paragraph (h)(4) of this section, safe harbor matching or nonelective contributions will be made to another plan for a plan year, provisions under that other plan specifying that the safe harbor contributions will be made and providing that the contributions will be QNECs or QMACs must also be adopted before the first day of that plan year.

[Tom Poje]

you can't change to a safe harbor if its an existing 401k except at the start of the year.

As long as the period of safe harbor is at least 3 months you could add to a profit sharing only plan during the year, or at least that is how i understand things.

[austin3515]

Tom -

In my case, the Safe Harbor would be effective on the 1st day of the Plan Year (March 1st).

But now I'm wonderiong if I can't still argue that I do have the remedial amendment period. Not having the Safe Harbor language is a disqualifying provision (actually, it;s the absence of a required provision, which I think is the same thing), so under the RAP, do I not have until 12/31/2010 to cure it? Or is the cited reg written so stringently as to render the RAP null and void?

[Tom Poje]

at the 2007 ASPPA conference (blame me again, I submitted this one)

Q19) Safe Harbor 401(k): A notice is issued indicating a safe harbor contribution will be made for the upcoming year, but the plan was never amended to contain safe harbor language. Now that it is after plan year end, it is too late to amend to correct the problem. Is the plan on the hook for the contribution, and must also run all appropriate tests?

A: Notwithstanding the notice provided, the plan terms do not provide for the safe harbor plan. Therefore, you should follow the plan terms and run the ADP test as needed. (Whether there is a Title I issue due to the notice is in the purview of the DOL.)

so not having safe harbor language simply means you have issued a bad notice. you haven't violated the terms of the document in any way shape or form.

thats the opposite of having the plan language and not issuing a notice. then you have an operational defect.

the only exception I know of is if you had issued a 'maybe' notice. then you have 30 days before the end of the plan year (1.401(k)-3(f))

and why would the regs be specific in this case but still let you amend anytime if your notice wasn't a maybe notice.

[12AX7]

I'm in agreement with Tom. I'm missing the connection with the RAP and the 12/31/10 deadline, but these are perhpas moot issues at this point.

[austin3515]

I was grasping for straws and seeing what I could grab onto My trustee is on vacation until after 2/28 (I sent the documents a few weeks ago!!).

Looks like we'll need to track him down - hopefully he's got his blackberry with him!

Regarding the RAP, I studied for the ERPA, knew that was an area that to me is incomprehensible!! so studied hard, and still cant figure out how that darn thing works

(But I did pass the tests...)

[12AX7]

Unless the Trustee is lost in space, then anyone can be located on this planet in 2011. I'll be taking the ERPA exams this year, but working with plan documents I may know a little about the RAP (I hope). Congrats on passing! The last exams I sat for were for QPA, but that was back in 1993.

[austin3515]

Here's my advice: Don;t study. They won't tell you the grade anyway. I was a sucker, and studied a lot. I like to think I got an A, but may have gotten a C- for all I know...

[12AX7]

I will study like a good pension admin, but as long as I pass, even with the lowest passing score, I will be happy. Since the test scores are not revealed, I'll be fine with that as well.