Safe Harbor Match in AA

[cpc0506]

We have been asked to restate for PPA an EGTRRA AA which has safe harbor matching provisions written into the AA. It is a basic safe harbor match. We have not done the administration for this plan in any prior year and have not been hired to be the TPA going forward. We have only been hired to restate for PPA.

The client then provided us a copy of the last 3 safe harbor notices provided and each notice specifically states that the Employer will NOT make the safe harbor match for the upcoming year. The client indicated that each notice was provided timely. The AA was not amended to remove the safe harbor match language. The client believes that providing a notice that they intended NOT to make the safe harbor match was sufficient.

We will remove the safe harbor language going forward but believe this client has a larger problem. Where do we go from here? What advise should we provide this client?

[rcline46]

I have seen documents which state that the notice itself is an amendment to the document, so be careful on reading the document.

[Lou S.]

I'm unaware of a "maybe notice" provision for the safe harbor match. My understanding is unless an amendment removes the safe harbor match for a year before the year starts, it's required by plan document. You can stop a safe harbor match but you have to give give 30 days notice to participants and you are subject to testing.

I'm also unfamiliar with the concept of the safe harbor notice itself being an amendment to the plan but I'm not saying that it is not possible.

[John Feldt ERPA CPC QPA]

If you determine that a disqualifying issue has occurred, inform the employer of the issue, the consequences, and the options for correction.

[cpc0506]

I can tell you that the EGTRRA AA was on the Datair prototype. Can anyone out there using Datair tell me if the Datair document allowed for the notice to be the amendment to the plan?

[BG5150]

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