Suspend Safe Harbor Match, Implement Match Subj to Vesting

[CLE401kGuy]

Plan currently has a Safe Harbor Match - the employer would like to eliminate the SH Match in favor of a match subject to vesting - The plan year just started 6/1/2014 - so we're just two months in.... to elminate the SH match - need to give 30 day notice, amend plan before end of PY and then be subject to ADP testing and TH requirements (this is prior to PY's beginning after '14 after which midyear SH suspension is permitted only if you’re operating at an economic loss or had included a potential reduction/suspension statement in your annual safe harbor notice to participants.

Is it permissible for the employer to turn right around and implement the new match that will be subject to vesting. Say that the SH provision is eliminated effective 8/31/14 and the vested match starts 9/1/14. I don't see any reason why this wouldn't be permitted, but wanted to hear some thoughts.

[Lou S.]

I see no problem.

[BG5150]

Is there going to be a big reduction in the match formula? Is the ER expecting a lot of turnover in the next 10 months?

Why not wait and do it for the full plan year and get all the protection and administration cost savings that SH affords the sponsor?

All the old SH match is 100% anyway. All the ER would lose out on is the match over the remaining part of the year to the level that it mighn't be vested.