From Safe Harbor to regular Match

[cpc0506]

Plan was established in 2008 as a safe harbor match plan.

Client decided to drop the safe harbor provison effective 1/1/13 and added a discretionary match and chose Prior Year Testing for 2013.

Prior TPA did not run an ADP/ACP test in 2012 since plan was safe harbor.

What do we do now?

[ETA Consulting LLC]

Run the test. No test was needed in 2012 since the plan was safe harbor. Now that you've changed (and to the prior year method), you need only to calculate the NHCE percentage for 2012. That should not be too complicated.

Good Luck!

[K2retire]

Plans that amend out of safe harbor are required to use current year testing.

[Tom Poje]

K2 - not 100% sure on that. a plan that is amended to reduce or suspend during the year must use current year testing. but I don't think there is such a rule for switching as of the start of the year.

If I recall correctly, a plan that was safe harbor is treated as having used the current year method for all years it was safe harbor (that only makes sense)

Since this plan was safe harbor since2008 that means it has been current year for 5 years which means it should be able to use prior years.

In addition, if I recall correctly, even if the plan had been is existence less than 5 years it could still switch.

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oh there it is, if I wasn't so lazy I would have looked up the site before posting

1.401(k)-2©(1)(i)