Safe Harbor 401(k) and Compensation Amendment

[msmith]

Plan Year begins on 10/01/2011.

Safe Harbor Notice given timely (30 days before plan year begins). Can the Plan's definition of compensation, for safe harbor allocation purposes, be amended prior to PYB 10/01/2011? A supplemental notice would be provided.

[Tom Poje]

probably, maybe, etc.

remember, the 30 days notice is definitely okay. anything after that and the beginning of the plan year is starting to tread on whatever surface...

for example, if the safe harbor is the 3%, then it has no effect on the persons decision to defer (most likely) so would probably never be considerd an issue.

(in fact, if you hadn't given a notice at all, the IRS has informally said the correction is to provide the notice as soon as possible. (Supposedly, or at least rumor has it, the new EPCRS would provide information on safe harbor notice issues, but who knows when that will be released)

if you have a safe harbor match then it might be considered a problem.

the whole idea is that the IRS vies 30 days as giving a person enough time to make an informed decision.