Safe Harbor Plan - Salary Deferral Election

[kdubinski]

I have a safe harbor plan that utilizes a basic safe harbor matching contribution.  Currently, salary deferral contributions are withheld from all gross pay including (but not limited to) vacation pay, sick pay, and bonuses.

The client would like to allow participants to separately elect to defer from any bonus paid to them.

Is this an acceptable mid-year change if the proper notice is provided?

[ETA Consulting LLC]

This may not require a plan amendment, since gross pay is already eligible.  Your change may simply be to provide a separate one-time election to each participant to be completed before bonuses are actually paid.  That 'election form' would explain that it's a one time election for the upcoming bonus, and a failure to complete would result in the current deferral election being used.  Point is, there doesn't appear to be a need to amend the plan, but merely facilitate a separate election.

Good Luck!