amend 401K to safe harbor 401K

[thepensionmaven]

Does a tested 401K have to be amended by October 1st to be a safe harbor plan for that year?

[Lou S.]

Does a tested 401K have to be amended by October 1st to be a safe harbor plan for that year?

You can never amend a regular 401(k) plan to safe harbor 401(k) plan mid-year. The lone exception is a 401(k) plan that properly gave out the "maybe notice", is handing out the required supplemental notice, and is amending for the year that they elected to be a 3+% non-elective SH for the year.

Any new calendar year plan or existing profit sharing plan must be be implemented/amended by October 1 to allow the minimum 3 month window for newly formed SH plans.

Existing 401(k) plans are are amending to safe harbor plans must timely distribute the notice 30 - 90 days before the next plan year (unless you have reasonable cause for less than 30 days notice) and must be amended to include the SH before the year starts - unless availing yourself of the aforementioned "maybe" notice on the 3% non-elective.

[thepensionmaven]

Does a tested 401K have to be amended by October 1st to be a safe harbor plan for that year?

Existing 401(k) plans are are amending to safe harbor plans must timely distribute the notice 30 - 90 days before the next plan year (unless you have reasonable cause for less than 30 days notice) and must be amended to include the SH before the year starts - unless availing yourself of the aforementioned "maybe" notice on the 3% non-elective.

Thanks for the info, but to answer the client's question, the plan could have been amended to safe harbor status if the plan had been amended prior to October 1st?

I just needed some ammunition in case he asks me why this can't be done for 2015 "because his plan had not been amended to SH by October 1st."

Or am I missing something??

[Lou S.]

No an existing 401(k) plan can not be amended to a safe harbor 401(k) plan as soon as the plan year begins so January 1, 2015 would have been too late to amend the plan to safe harbor.

And existing 401(k) plan would have had to hand out the safe harbor notice for 2015 by December 1, 2014 and amended the plan to safe harbor effective 1/1/15 by December 31, 2014 to be safe harbor for 2015.

If the Plan was a profit sharing ONLY plan that was adding a NEW 401(k) feature, October 1, 2015 would have been the deadline to give the 3 month deferral window for new plans.

See the 401(k)(13) regs for additional info.