Safe Harbor "maybe" plans

[Belgarath]

Just curious - the requirement that the plan be amended by 30 days before the end of the plan year seems very strange. The IRS was very helpful in allowing mid-year amendments on SH plans - has any organization (ASPPA, etc.) also been advocating for a change to this 30 day requirement? Obviously, I can see requiring the amendment to be signed by the end of the plan year, but this is a nonelective 3% we are talking about. Absent the amendment, the participants get nothing. What is the sense in penalizing participants just because the employer misses the 30 day deadline? Seems like a no-brainer to allow an employer to "opt in" at any time up to the end of the plan year, with no notice requirement, either.

Thoughts?

[ETA Consulting LLC]

Some documents are set up to provide the wait and see approach without constant amendments; where you merely provide the appropriate notifications each year.  I've, personally, always felt it strange that a document would be drafted to require the plan sponsor to actually amend to reflect the safe harbor each year; that doesn't appear to be the most efficient method to get to the same end.

Good Luck!

[Tom Poje]

I think it is built into the same concept as providing the notice in the first place, it is suppose to be done so the participant can make a reasonable 'decision'.

so lets say they would amend the plan for the year to be safe harbor. you were still supposed to provide a notice 30 day beforehand for the upcoming year. so you kill 2 birds with one stone notice.

"yes we will be top heavy for the current year and maybe next year"

it is already pushing it (sort of) to proved a notice less than 30 days for a plan that is already safe harbor, and at least then the 30 days is considered 'reasonable'. No such clause exists for an amendment in the case of 'maybe' and I don't think I would push it.

[Belgarath]

Thanks Tom, and I wouldn't "push it" by amending a plan after the 30-day advance deadline, but again, how is there any "decision" by the participant - reasonable or otherwise, with respect to getting employer money in a nonelective 3% safe harbor? You get it or you don't - ain't no choice. My point is not what the regulations say, and they seem pretty clear, but that they are unreasonable, and potentially detrimental to participants, so it seems like this would be a good item for the lobbying arm to target. Maybe I'm missing something.

And on another note - delighted to hear you came through things ok! Sounds like a whole lot of folks in your area weren't so fortunate.

[Tom Poje]

the people one block away had up to 6 inches of water in the house. I only conclude the block I am on must sit up at least 6 inches higher than one block away. talk about fortunate (and very very blessed) that wasn't a consideration when I bought a house years ago. in fact, I was even shown some of those houses that suffered water damage.

[Belgarath]

You have to wonder, hearing some of the horror stories about rot, mold, whatever, if in the long run it sometimes isn't better to have a complete loss and just rebuild. No fun either way. But in the long run, it's just things - if everyone came through it alive and safe, the rest really doesn't ultimately matter. Still very stressful at best.

We had a partial loss due to a fire 20+ years ago, and cleanup-repair of water/smoke damage was not enjoyable, but everyone safe (no one home but me at the time, and fire started in an outbuilding) and I got the pets out, so that's all that mattered. Like you, we considered ourselves very lucky. Since then, I've never griped about paying my homeowner's insurance premiums!