Adding safe harbor 401(k) to profit sharing mid year.

[Jim Chad]

Is it legal to Add safe harbor 401(k) to profit sharing mid year?

[Lou S.]

Assuming they have no other 401(k) and you have at least 3 months left in the plan year, then yes you can.

[Jim Chad]

Thank you, Lou. I just wasn't sure.

[Tom Poje]

the other option I have seen done is go with a "first year uses prior testing at 3%" and then go with safe harbor the following year.

If you only have 1 HCE that might limit him to 5%, but with comp of 260,000 it is still 13,000 and a test that is passed

[Lou S.]

the other option I have seen done is go with a "first year uses prior testing at 3%" and then go with safe harbor the following year.

If you only have 1 HCE that might limit him to 5%, but with comp of 260,000 it is still 13,000 and a test that is passed

We've used that option when there is less than 3 months left and you can't put in the safe-harbor that year because you can't meet the minimum time requirements.

Works for new plans or a PS plan adding a 401(k) feature for the first time.