Terminate Safe Harbor 401(k) mid year

[Dougsbpc]

Have a Dr. Client with 5 eligible participants and a calendar year safe harbor 401(k) plan.

They have maintained the plan for about 8 years.

They make a Safe Harbor NEC.

Question: could they terminate the plan now (before year end) and not make the Safe Harbor 3% contribution? In this case, no salary deferrals or other allocations were made to any HCE or Key employee this year.

I would think there will not be an ADP test problem or a top heavy minimum problem.

Thanks.

[JRN]

Why are you working on such a nice day?

[K2retire]

Terminating SH plans generally must give a 30 day notice before they can stop the SH contribution. This close to the end of the year, it probably doesn't make sense to terminate it early.

[Dougsbpc]

So for example, if a notice were provided today, the employer would still need to provide the safe harbor contribution on just over 11 months of compensation correct?

[Lou S.]

Did they provide a "maybe notice" or is the plan a 3% guaranteed SH?

If the former just give the supplemental notice that you will not be making the SH. If the later, the 3% contribution will be due on compensation through date of termination.