Safe harbor 401(k) plans mid-year amendments

[Belgarath]

Situation - employer has safe harbor nonelective 3% formula, with a discretionary PS contribution, currently allocated on a proportional basis. Wants to amend, for 2012, to a rate group tested allocation.

I know the IRS has taken a rather (in my opinion) asinine view of this at some past ASPPA conferences, essentially opining that mid-year amendments aren't permissible, other than those already specifically granted, for example, in IRS Announcement 2007-59.

While I won't bore you with why I think they are being unreasonable on this, I just wondered if anyone actually heard the 2011 discussion from the podium? If so, did they just reiterate their tired old "logic" as to why mid-year amendments aren't permissible, or did they provide any substantive discussion?

To use an extreme example, if the plan currently excludes fork lift operators, and they want to amend to include fork lift operators, they should be able to do so. And amending the PS allocation method shouldn't matter, as they will get their safe harbor nonelective 3% regardless. (I could perhaps see a convoluted devil's advocate argument for safe harbor matching issues)

Thanks.

[Kevin C]

Will this help?

http://benefitslink.com/boards/index.php?s...st&p=222497

[Belgarath]

Thanks Kevin - not the reply I was hoping for, of course, but pretty much what I expected.

I can tell you this - there are a ton of safe harbor plans out there that get amended for provisions other than those directly, or even indirectly, relating to the specific safe harbor provisions. I simply don't understand the apparent IRS position on this, not do I understand why they refuse to issue additional clarification/guidance. Oh well, just another little pothole in the drive down administration lane.