short plan year for safe harbor plan or retroactive effective date?

[AKconsult]

If an employer wants to start a new safe harbor plan in April, can they make it effective retroactive back to 1/1?

The 401k Regs read that “ a plan will fail to satisfy <safe harbor> unless plan provisions that satisfy the rules of this section are adopted before the first day of the plan year”. 1.401(k)-3(e)(1) This would seem to require that the plan itself cannot have an effective date earlier than the date it is signed.

We have taken the position before that we will make the plan effective back to 1/1 and then just put a 4/1 delayed effective date in place for the 401(k) and safe harbor provisions but I wonder if that is correct? That seems to violate the above rule.

What are others doing?

Thanks!

[K2]

As long as the first plan year is 3 months long, and this is not a successor plan, then I think you are fine. You are adding a CODA for the first time on 4/1, which is permissable under -3(e)(2).