Eligibility change mid year to safe harbor plan.

[Rai401k]

Now that we can make changes mid year to safe harbor plans can we increase the eligibility requirements?

Plan currently has a 6 month wait for all contributions (including sh match). The client would like to increase it to 12 months.

from ASPPA (under prohibited mid year changes) - "a mid year change to reduce the number, or otherwise narrow the group of employees eligible receive the safe harbor contribution"

from Sungard (under prohibited mid year changes) - " a mid year change to reduce the number, or otherwise narrow the group of employees eligible to receive the safe harbor contribution. However this does not limit the ability of the employer to amend a plan mid year to change eligibility requirements for employees who have not yet become eligible to receive the safe harbor contribution.

Sungard is stating that you can increase the eligibility requirements mid year but i haven't seen this anywhere else so i wanted to make sure that it is in fact permitted.

[GMK]

Maybe Example 7 on page 8 here:

https://www.irs.gov/pub/irs-drop/n-16-16.pdf

and check the limits if it's a QACA.

[Rai401k]

not a QACA. Thank you for the link, yes I believe it's permitted. We are increasing the eligibility requirements and therefore it would only keep out employees who are not otherwise eligible for the safe harbor yet.

Thanks again!