Safe Harbor, sort of

[austin3515]

Takeover plan (we hope ) Prior "data processing" provider made them a Safe Harbor Plan effective January 31 2011, but the Plan was not safe harbor in 2010, so clearly not correct.

So now what? The document has been signed, so tehcnically the matching contribuion is due. But now my document does not include the ADP test. It seems to me that I have no means of doign the right thing here. Is VCP the only option?

[Kevin C]

How about an -11(g) amendment?

[austin3515]

I'm not following. I thought that was to correct coverage/nondiscriminatiuon issues, not plan document failures, which is what I think I got...

[Kevin C]

-11(g) works for 401(a)(4) issues. ADP and ACP compliance is covered by 401(a)(4). See 1.401(a)(4)-1(b)(2)(ii)(B). That reg section is referenced in -11(g)(2).

[austin3515]

So you're saying -11g allows me to amend a defective safe harbor plan back into an ADP tested plan?

[austin3515]

Kevion, I'm still stuck on the fact that I'm not failing a test, I have a plan document problem.

From the reg:

(2) Scope of corrective amendments. For purposes of satisfying the minimum coverage requirements of section 410(b), the nondiscriminatory amount requirement of §1.401(a)(4)–1(b)(2), or the nondiscriminatory plan amendment requirement of §1.401(a)(4)–1(b)(4), a corrective amendment may retroactively increase accruals or allocations for employees who benefited under the plan during the plan year being corrected, or may grant accruals or allocations to individuals who did not benefit under the plan during the plan year being corrected.

[Kevin C]

There is an old thread where it was suggested an -11(g) amendment could keep a plan qualified after SH problems. Your situation made me think of that thread.

Now that you mention it, 401(b) would be a better cite since it is a 2011 amendment that caused the problem.

[austin3515]

Now we're talking So I can amend the plan to reactivate the ADP test for 2011, I have until the end of the year. Still owe the SH Match, although I could probably stop the match "today" with 30 days notice.