Safe Harbor Match suspended beginning of plan year

[Gilmore]

I appreciate any comments on the following scenario:

A 401(k) plan is established for calendar year 2014 with a safe harbor match and operates throughout the year as such.

Prior to the start of the 2015 plan year the plan is amended to remove the safe harbor match.

The employer does not provide any notification to the participants that the plan will no longer be a safe harbor plan for 2015.

Question:

Does the fact that the participants were not provided notice that the plan will not be a safe harbor for the start of the new plan year (2015) mean that the employer must still make the safe harbor match for 2015?

If so, I'm assuming this would be a corrective contribution?

The participants were not provided a new SPD or SMM either.

Thank you.

[John Feldt ERPA CPC QPA]

No. If it is a calendar year plan, they have now missed the deadline to hand out the SMM or SPD (a DOL requirement). If they did not tell the employees, then they have probably established some ill-will with their employees also. Recommend they get the SMM or SPD out to participants now. Whoever did the amendment should have been engaged to also provide the employer with an SMM or SPD to hand out to eligible employees.

[Tom Poje]

or put another way:

you have a document that indicates the plan is not a safe harbor.

therefore, plain and simple, the plan is not a safe harbor.

years ago that was one of the Q and As (sort of)

the employer gave out a notice indicating the plan was safe harbor, but it was never amended to do so.

The IRS indicated the plan was not safe harbor, with the same comment as John: might have some hard feelings amongst the employees.

of course, there is nothing to stop the employer (assuming the document provides for a discretionary match and the cash is available) to make a match similar to what the safe harbor was at least up until the point of time the SMM is passed out.

[Gilmore]

Thank you for the input. The service provider who did the document amendment did provide a new SPD, but the employer is certain he neglected to give it out.

Thank you.

[K2retire]

but the employer is certain he neglected to give it out.

I suspect that more employers neglect that detail than the ones who accomplish it.