Safe Harbor Plans

[Nassau]

Two-fold question:

1) Is it possible for a 401(k)/Profit Sharing Plan to adopt either the Traditional Safe Harbor or the PPA Safe Harbor plan design at any time during the plan, or are they limited to the beginning of the plan year?

2) If a plan elects the PPA Safe Harbor design and implements a default percentage of 6%, are they required to have any automatic increases of 1% in subsequent years?

Can someone provide me with the Code or Regulations that state the Safe Harbor information.

[Lou S.]

Two-fold question:

1) Is it possible for a 401(k)/Profit Sharing Plan to adopt either the Traditional Safe Harbor or the PPA Safe Harbor plan design at any time during the plan, or are they limited to the beginning of the plan year?

An new plan or conversion of existing 401(k). A new plan (or conversion of PS only) you can implement traditional SH as long as you have at least 3 months of effective deferral for the ees, so for a calendar year plan implement prior to 10/1. For a conversion, you need to give notices out 30 days* before the year starts and adopt prior to the year begining, unless you are doing a "maybe notice for the 3%".

*some execptions apply

On PPA safe harbor, I'm not sure, I assume the time frames are the same but you know what they say about assumptions....

2) If a plan elects the PPA Safe Harbor design and implements a default percentage of 6%, are they required to have any automatic increases of 1% in subsequent years?

My understanding is that you are already at 6% and don't need the 1% annual bump.

[Nassau]

Can someone provide me with the Code or Regulations that state the Safe Harbor information. Thanks.

[Kevin C]

The ADP safe harbor regs are in 1.401(k)-3. The amendment timing rules are in (e), the Plan Year Requirement section. The QACA rules are in (j).

The ACP safe harbor regs are in 1.401(m)-3. The amendment timing rules are in (f).